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April 24th, 2008, 12:55 PM
Crisis in Food Prices Threatens Worldwide Starvation: Is it Genocide?
By Richard C. Cook
Global Research, April 24, 2008
Rising worldwide food prices are resulting in shortages, riots and protests, promises by governments to expand food aid, expressions of concern by international bodies like the World Bank, and stress on household budgets even in developed countries like the U.S. Did this just “happen” or is there a plan?
Plenty of commentators think they have it figured out and blame such factors as greater demand for high-end protein menus by the increasingly upscale populations of China and India , weather factors relating to global warming such as drought in Australia , and the diversion of animal feed crops such as corn and soybeans to ethanol production. L.H. Teslik of the Council on Foreign Relations speaks of “bubbling inflation and rising oil prices.”
There is also the question of whether a role is being played by commodity speculation. The idea is that faced with the global financial crisis and the collapse of mortgage-based securities, investors are flocking to resource-based tangibles as a hedge against recession and the decline of the U.S. dollar. Hence gold is at record levels with oil keeping the same pace. How else to explain, for instance, the doubling of the price of rice in Asian markets in less than two months? Standard Chartered Bank food commodities analyst Abah Ofon says, “Fund money flowing into agriculture has boosted prices. It’s fashionable. This is the year of agricultural commodities.”
But the idea that speculation is at fault is disputed by no less than New York Times columnist Paul Krugman, one of the world’s leading monetary economists, who writes:
Crisis in Food Prices Threatens Worldwide Starvation: Is it Genocide?
By Richard C. Cook
Global Research, April 24, 2008
Rising worldwide food prices are resulting in shortages, riots and protests, promises by governments to expand food aid, expressions of concern by international bodies like the World Bank, and stress on household budgets even in developed countries like the U.S. Did this just “happen” or is there a plan?
Plenty of commentators think they have it figured out and blame such factors as greater demand for high-end protein menus by the increasingly upscale populations of China and India , weather factors relating to global warming such as drought in Australia , and the diversion of animal feed crops such as corn and soybeans to ethanol production. L.H. Teslik of the Council on Foreign Relations speaks of “bubbling inflation and rising oil prices.”
There is also the question of whether a role is being played by commodity speculation. The idea is that faced with the global financial crisis and the collapse of mortgage-based securities, investors are flocking to resource-based tangibles as a hedge against recession and the decline of the U.S. dollar. Hence gold is at record levels with oil keeping the same pace. How else to explain, for instance, the doubling of the price of rice in Asian markets in less than two months? Standard Chartered Bank food commodities analyst Abah Ofon says, “Fund money flowing into agriculture has boosted prices. It’s fashionable. This is the year of agricultural commodities.”
But the idea that speculation is at fault is disputed by no less than New York Times columnist Paul Krugman, one of the world’s leading monetary economists, who writes:
“My problem with the speculative stories is that they all depend on something that holds production — or at least potential production — off the market. The key point is that the spot price equalizes the demand and supply of a commodity; speculation can drive up the futures price, but the spot price will only follow if the higher futures prices somehow reduce the quantity available for final consumers. The usual channel for this is an increase in inventories, as investors hoard the stuff in expectation of a higher price down the road. If this doesn’t happen — if the spot price doesn’t follow the futures price — then futures will presumably come down, as it turns out that buying futures produces losses.”Solid data in this area is hard to come by. Probably the chief common denominator among commentators, especially those advocating a supply and demand or global warming perspective, is that they have so little solid information. Thus it is refreshing to find a study that contains meaningful statistics such as one
