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OVERVIEW:
* STUDIES LINE UP ON PARKINSON’S AND CHEMICAL POISONS LINK
By Maggie Fox
* FOOD & DRUG ADMINISTRATION AWARE OF DANGERS TO FOOD
By Elizabeth Williamson
* GLOBAL EFFORT TO SAVE ENDANGERED CROPS GETS $37.5 MILLION INFUSION
By Andrew C. Revkin
* U.S. AGRICULTURAL POLICY IS OUTDATED
By Neal Galloway
* BUSH ADMINISTRATION GAINS SUPPORT FOR NEW APPROACH ON FOOD AID
By Celia W. Dugger
* CROP PRICES SOAR, PUSHING UP COST OF FOOD GLOBALLY
By Patrick Barta
* TYSON FOODS AND CONOCO/PHILLIPS TO PRODUCE DIESEL FUEL FROM ANIMAL FAT
By Clifford Krauss
STUDIES LINE UP ON PARKINSON’S AND CHEMICAL POISONS LINK
By Maggie Fox
Reuters Health and Science Editor
April 23, 2007
Evidence that pesticides can cause Parkinson’s disease is stronger than it has ever been after a meeting of experts who have put together links in animals and people, scientists say.
One study shows that farm workers who used the common weedkiller paraquat had two to three times the normal risk of Parkinson’s, a degenerative brain disease that eventually paralyzes patients. A second study shows that animals exposed to paraquat have a build-up of a protein called alpha-synuclein in their brains. This protein has been linked to Parkinson’s in the past. A third piece of the puzzle shows that this buildup of protein kills the same brain cells affected in Parkinson’s.
“All of these pieces really look like they are coming together now,” Dr. William Langston, founder of the non-profit Parkinson’s Institute, told Reuters. Langston and colleagues said they were energized by research presented at the Parkinson’s Disease Environmental Research meeting in Monterey, California, earlier this month.
Parkinson’s disease, which affects more than one million patients in the United States, is marked by the death of brain cells that produce dopamine. Dopamine is a neurotransmitter, or message-carrying chemical, associated with movement. Drugs can delay symptoms for a while but there is no good treatment and no cure.
Farm workers are at especially high risk but links to pesticides have been difficult to document because years usually pass between a person’s exposure to pesticides and the development of the disease.
Dr. Beate Ritz of the University of California at Los Angeles and Dr. Caroline Tanner of the Parkinson’s Institute looked at 80,000 people in Iowa and North Carolina and found farm workers exposed to paraquat had twice the expected risk of Parkinson’s over their lifetimes.
Exposure to another pesticide called dieldrin also raised the risk, the study, funded by the National Institute of Environmental Health Sciences, found. A second study found similar effects in farm workers in central California.
What made the studies especially important was that pesticide exposure could be carefully documented through records of pesticide purchase, Langston said. Details will be published in a scientific journal later.
Dr. Donato Di Monte of the Parkinson’s Institute gave paraquat to laboratory animals and found it caused a buildup of alpha-synuclein in the brain that killed the same neurons affected by people with Parkinson’s disease. “This increase in alpha-synuclein in the brain could be the missing link between the exposure to this agent and how this agent causes the disease,” Di Monte said in a telephone interview. “Maybe being exposed to paraquat may not be enough to cause the disease but increases the probability the disease may develop,” Di Monte said.
Langston and Di Monte said inflammation also could be a factor. “Give an animal a compound that creates a marked inflammation response in the body … and months later the animal loses cells in same area of the brain that is associated with Parkinson’s,” Langston said. “This suggests that systemic inflammation may somehow sensitize the brain.”
Multiple concussions, which can cause inflammation in the brain, raise the risk of Parkinson’s, Langston said.
Two other groups of people that have a higher-than-average risk of Parkinson’s are health workers and teachers. “At first glance that doesn’t make sense,” Langston said. But both do have something in common — frequent exposure to viruses.
It could be, Langston and Di Monte said, that if a person is exposed to a pesticide while his or her brain has inflammation, this greatly raises the risk of Parkinson’s many years later.
FOOD & DRUG ADMINISTRATION AWARE OF DANGERS TO FOOD
By Elizabeth Williamson
Washington Post
April 23, 2007
The Food and Drug Administration has known for years about contamination problems at a Georgia peanut butter plant and on California spinach farms that led to disease outbreaks that killed three people, sickened hundreds, and forced one of the biggest product recalls in U.S. history, documents and interviews show.
Overwhelmed by huge growth in the number of food processors and imports, however, the agency took only limited steps to address the problems and relied on producers to police themselves, according to agency documents.
Congressional critics and consumer advocates said both episodes show that the agency is incapable of adequately protecting the safety of the food supply. FDA officials conceded that the agency’s system needs to be overhauled to meet today’s demands, but contended that the agency could not have done anything to prevent either contamination episode.
Last week, the FDA notified California state health officials that hogs on a farm in the state had likely eaten feed laced with melamine, an industrial chemical blamed for the deaths of dozens of pets in recent weeks. Officials are trying to determine whether the chemical’s presence in the hogs represents a threat to humans.
Pork from animals raised on the farm has been recalled. The FDA has said its inspectors probably would not have found the contaminated food before problems arose. The tainted additive caused a recall of more than 100 different brands of pet food. The outbreaks point to a need to change the way the agency does business, said Robert E. Brackett, director of the FDA’s food-safety arm, which is responsible for safeguarding 80 percent of the nation’s food supply.
“We have 60,000 to 80,000 facilities that we’re responsible for in any given year,” Brackett said. Explosive growth in the number of processors and the amount of imported foods means that manufacturers “have to build safety into their products rather than us chasing after them,” Brackett said. “We have to get out of the 1950s paradigm.”
Tomorrow, a House Energy and Commerce subcommittee will hold a hearing on the unprecedented spate of recalls.
“This administration does not like regulation, this administration does not like spending money, and it has a hostility toward government. The poisonous result is that a program like the FDA is going to suffer at every turn of the road,” said Rep. John D. Dingell (D-Mich.), chairman of the full House committee. Dingell is considering introducing legislation to boost the agency’s accountability, regulatory authority and budget.
In the peanut butter case, an agency report shows that FDA inspectors checked into complaints about salmonella contamination in a ConAgra Foods factory in Georgia in 2005. But when company managers refused to provide documents the inspectors requested, the inspectors left and did not follow up.
A salmonella outbreak that began last August and was traced to the plant’s Peter Pan and Great Value peanut butter brands sickened more than 400 people in 44 states. The likely cause, ConAgra said, was moisture from a roof leak and a malfunctioning sprinkler system that activated dormant salmonella. The plant has since been closed.
The 2005 report shows that FDA inspectors were looking into “an alleged episode of positive findings of salmonella in peanut butter in October of 2004 that was related to new equipment and that the firm didn’t react to, . . . insects in some equipment, water leaking onto product, and inability to track some product.” During the inspection, the report says, ConAgra admitted it had destroyed some product in October 2004 but would not say why.
“They asked for some of our documentation and we made the request to them that they put it in writing due to concerns about proprietary information,” ConAgra spokeswoman Stephanie Childs said last week. “We did not receive a written request, . . . they filed the report and that was that.”
Until February of this year. That’s when the Centers for Disease Control and Prevention notified the FDA of a spike in salmonella cases in states near the ConAgra plant. The agencies contacted the company, which initiated a recall and shut the plant for upgrades.
Brackett said that if the FDA inspector had seen anything truly dangerous the agency would have taken further action. But, he said, the agency cannot force a disclosure, a recall or a plant closure except in extreme circumstances, such as finding a hazardous batch of product. The problem in 2005, he added, “doesn’t necessarily connect to the salmonella outbreak right now. It’s not unusual to have it in raw agricultural commodities.”
The FDA has known even longer about illnesses among people who ate spinach and other greens from California’s Salinas Valley, the source of outbreaks over the past six months that have killed three people and sickened more than 200 in 26 states. The subsequent recall was the largest ever for leafy vegetables.
In a letter sent to California growers in late 2005, Brackett wrote, “FDA is aware of 18 outbreaks of foodborne illness since 1995 caused by [E. coli bacteria] for which fresh or fresh-cut lettuce was implicated. . . . In one additional case, fresh-cut spinach was implicated. These 19 outbreaks account for approximately 409 reported cases of illness and two deaths.”
“We know that there are still problems out in those fields,” Brackett said in an interview last week. “We knew there had been a problem, but we never and probably still could not pinpoint where the problem was. We could have that capability, but not at this point.”
According to Caroline Smith DeWaal, who heads the Center for Science in the Public Interest, a consumer-advocacy group, “When budgets are tight . . . the food program at FDA gets hit the hardest.”
In next year’s budget, passed amid discovery of contamination problems in spinach, tomatoes and lettuce, Congress has voted the FDA a $10 million increase to improve food safety, DeWaal said. The Agriculture Department, which monitors meat, poultry and eggs and keeps inspectors in every processing plant, got an increase 10 times that amount to help pay for its inspection programs. The FDA visits problem food plants about once a year and the rest far less frequently, Brackett said.
William Hubbard, who retired as associate commissioner of the FDA in 2005 and founded the advocacy group Coalition for a Stronger FDA, said that when he joined the agency in the 1970s, its food safety arm claimed half its budget and personnel. “Now it’s about a quarter . . . at a time in which the problems have grown, the size of the industry has grown and imports of food have skyrocketed,” Hubbard said.
GLOBAL EFFORT TO SAVE ENDANGERED CROPS GETS $37.5 MILLION INFUSION
By Andrew C. Revkin
New York Times
April 19, 2007
Scattered around the world in jars, fields, freezers and vaults are tens of thousands of endangered varieties of wheat, yams and 19 other crops that underpin the global food supply.
With disturbing regularity, experts say, this agricultural bounty is eroding as war, storms, scant money or bad management, particularly in the world’s poorest places, cause unique seed varieties to deteriorate or disappear. Iraq’s bank of ancient wheat, barley and other crop strains in the town of Abu Ghraib was looted during the war. An international rice repository in the Philippines was shredded by a typhoon last year.
Now, the first international effort to restore, organize and safeguard scattered seed banks holding some 165,000 varieties of the 21 crop plants will receive a $37.5 million infusion, people involved in the project said yesterday: a $30 million grant from the Bill and Melinda Gates Foundation and $7.5 million from Norway. The project, undertaken by the Global Crop Diversity Trust and the United Nations Foundation, will focus particular attention on “orphan” crops — like cassava, coconut and taro — that are staples in poor countries but have not been the focus of commercial plant breeders.
“Many countries today are sitting there watching these seed collections die,” said Cary Fowler, the executive director of the crop trust, based in Rome. “We offer the chance to refresh and regenerate those varieties and safely store backup supplies in another location.” The most important activity, Mr. Fowler said, will be working to salvage aging or poorly preserved seed and plant varieties, growing new seed and storing it properly.
Some of the most important food plants are particularly hard to preserve because they do not grow from seeds, he said, so the project will include an effort to develop new methods for long-term storage of samples. Backup supplies of the rare seeds and cuttings will be stashed in bunkers being dug this year in permafrost on the Arctic island of Spitsbergen under a separate initiative of the crop trust and Norway. The complex is intended to safeguard the global food supply in the event of a global catastrophe like an asteroid collision.
The need to preserve crop diversity is greater than ever, he said, with the population steadily rising and significant shifts in climate patterns projected because of human-driven global warming. Changing climates require farmers to seek new traits in crops. The project will also develop a uniform searchable global database linking information on the contents of hundreds of plant gene banks.
U.S. AGRICULTURAL POLICY IS OUTDATED
By Neal Galloway
The Collegian (University of Tulsa)
April 3, 2007
United States agriculture policy is outdated, harmful to small farmers and devastating to third world countries trying to make a profit by growing crops. The basic situation is as follows: in the wake of the Great Depression, subsidy programs were put into place initially as temporary measures, to help farmers during an economic crisis.
According to the USDA’s website, in the 1930s about 25% of the U.S. population lived and worked on the nation’s six million small farms and these subsidies protected the livelihood of farmers — at that time about a quarter of the country’s population. However, by 1997 about 157,000 large farms accounted for 72% of farm sales, with only two percent of the U.S. population residing on farms.
This changing of the American farming landscape without a significant change in agricultural subsidies policy has created a system that encourages overproduction of crops. Farmers (mostly large scale farmers, or corporate farmers) produce as much of a product as they can. Since they are guaranteed a minimum price by the U.S. government, whatever cost of production the market value of their crops do not cover, the government makes up the difference.
So what happens to all the extra crops that Americans don’t eat?
All the extra crops are dumped onto the international market which drives the prices of those goods lower than the cost to grow them. This is simply devastating to the many countries who base their wellfare on agriculture. Take the cotton industry. According to Oxfam America, a non-profit organization dedicated to ending world poverty, more than ten million people in West and Central African countries earn their livelihoods from cotton production.
Oxfam says, “The United States is the world’s largest exporter and subsidizer of cotton, spending nearly four billion a year on subsidies. this is roughly three times the entire U.S. aid budget for Africa’s 500 million people.” The resultant overproduction and dumping of cotton on the world market, drives the price of cotton below what it takes to produce, even in small countries where the cost of production is lower than in the U.S.
Farmers in these agriculture-dependant countries are unable to sell their crops for profit. As a result, these farmers cannot afford to educate their children, obtain decent housing and clothing or even feed themselves or their families. The continued support of U.S. agricultural subsidies policies in the United States should not be considered a political slight, but rather a violation of human rights.
Even within the United States, agricultural subsides clearly benefit large scale corporate farms and not small family owned farms. According to a press release from Oxfam, the largest ten percent of cotton farms receive three quarters of total payment. In 2001, ten farms received $17 million between them. And this kind of statistic holds true across other kinds of crops that the U.S. government also subsidizes.
Both at home and abroad, the current farm bill, the legislation under which subsidies fall, is harmful to the livelihoods of people who are attempting (and in many cases obligated) to make a living from farming. This year, Congress will vote on a new farm bill. I hope that they recognize the harm that a continuation of current legislation will cause and create a new farm bill that stops rewarding the lobbying corporate farms and takes the lives of millions of farmers worldwide into careful consideration.
EDITOR’S NOTE: John Hansen, president of the Nebraska Farmers Union adds: “Oxfam’s international trade cartel friendly policy is what is outdated, and has definitely been harmful and devastating to third world countries. Oxfam International has been supporting the same trade and policy that our very own U.S. based international grain and meat traders have been for the past number of years. “
“Oxfam’s take on world food policy is not to build economically healthy family farmer and rancher based agriculture. They do not focus on profitability for family farmers, nor do they deal with market concentration. As a result, they have not been playing a very positive role in efforts to change world trade policies. They seem to believe that everyone starves to death economically, then, somehow, magically, self sufficiency breaks out.”
BUSH ADMINISTRATION GAINS SUPPORT FOR NEW APPROACH ON FOOD AID
By Celia W. Dugger
New York Times
April 19, 2007
KANSAS CITY, Missouri — Waiters in white aprons maneuvered through a noisy cocktail party here Tuesday evening, offering heaping platters of jumbo shrimp, lamb chops and crab-stuffed mushrooms to a crowd of people in town for an annual food aid conference dedicated to ending world hunger.
As shipping and agribusiness executives, charitable workers, lobbyists and federal employees mingled at Morton’s steakhouse, Charles Worledge, who works for the Long Island-based Sealift Inc., a major shipper of American food to the hungry, offered an insight essential to understanding the politics of food aid. “I thought this was a charity,” he explained during the party, for which another shipping company played host. “It’s not. It’s a business.”
It was here in Kansas City, at the 2005 food aid conference, that the Bush administration pushed for a fundamental change in food aid that would have diminished profits to domestic agribusiness and shipping companies. It proposed allowing a quarter of the Food for Peace budget to be used to buy food in poor countries near hunger crises, rather than buying only American-grown food that had to be shipped across oceans. And Secretary of Agriculture Mike Johanns spoke at the conference on Wednesday to again make the administration’s case for the same idea, contending that such a policy would speed delivery, improve efficiency and save many lives.
Congress in each of the past two years killed the proposal, which was opposed by agribusiness and shipping interests who stood to lose business, even as it won support from liberal Democrats like Representatives Barney Frank of Massachusetts and Earl Blumenauer of Oregon – generally not a subset of lawmakers found in the president’s corner. But there are signs that the frozen politics of the issue are beginning to thaw, especially as evidence of flaws in the current aid system mounts.
A Government Accountability Office report released on the eve of this conference described in stark detail a system rife with inefficiencies: the amount of food shipped over the past five years has fallen by half as shipping and other logistical costs have soared. Only a little more than a third of federal food aid spending actually buys food. The United States feeds about 70 million people a year now instead of the more than 100 million it fed five years ago. And experts worry that the food aid budget will feed even fewer of the world’s 850 million hungry people as soaring demand for corn to make ethanol drives up the cost of that staple, a mainstay of food aid programs.
This year, some farm state lawmakers are for the first time considering backing a pilot program to test buying food overseas. Representative Jo Ann Emerson, a Missouri Republican on the Agricultural Subcommittee of the House Appropriations Committee, opposes major changes in food aid, but, she said, “doing a small demonstration is fine with me. If it turns out to work better in some places than others,” she said, “I don’t have a big problem with that.”
And some influential supporters of the administration’s more ambitious proposal, contained in the farm bill, are speaking out. Former President Bill Clinton recently said at a fund-raiser for Bread for the World, a Christian group that lobbies on hunger issues, that it was to Mr. Bush’s “everlasting credit” that he had proposed buying food aid in poor countries. Such a policy had never crossed his mind when he was president, Mr. Clinton said, but he thought it was a great way to help farmers in Africa and buy food more efficiently.
And while an alliance of 15 nonprofit groups involved in food aid has endorsed only a pilot program for local purchase, Catholic Relief Services, which has a million donors and links with 13,000 parishes, has embraced the administration’s proposal. Addressing hundreds of people assembled at the conference, Ken Hackett, president of the agency, which is a major player in food aid, declared, “C.R.S. supports the administration’s request for greater flexibility through local purchase.”
At perhaps no time since the government’s food aid program was created during the Eisenhower administration over a half century ago has there been more ferment about its future among scholars, politicians and advocates for the poor. The curious mix of altruistic and self-interested motivations that animate American food aid spring from its origins. Early in the 1950s, the government was the farmer’s buyer of last resort when commodity prices fell, and as a result it sat on mountains of grain. Public Law 480 and the Food for Peace program, adopted in 1954, provided a way to dispose of the surplus grain, which was costly to store, and at the same time feed the world’s hungry people. The law mandated that food for the program be grown domestically.
Over the years, the farm programs evolved, and the government shifted to buying virtually all food on the open market, but the requirement that it be grown in the United States never changed. In recent years, the United States has bought more than half the food for its aid programs from just four agribusinesses and their subsidiaries: Archer Daniels Midland, Cargill, Bunge and Cal Western Packaging, according to the Agriculture Department.
Some researchers and advocates say it is time to rethink the American approach to fighting world hunger. “Are we committed to eradicating hunger because it’s feasible, not terribly expensive and our moral obligation as the richest society in human history?” asked Christopher B. Barrett, a Cornell University economist and the co-author of “Food Aid After Fifty Years.” “Or are we just trying to placate a few agribusiness, shipping and NGO constituencies with a handout?” referring to nongovernmental organizations.
But some in Congress, as well as lobbyists for interest groups that benefit from food aid, warn that untying aid from requirements that the food be grown in America and mostly shipped on American-flagged vessels would shatter the political coalition that has sustained the program for decades and made the United States the world’s largest food aid donor. They also warn that cash sent to poor countries can be misused or stolen, and that a mismanaged program to buy food in poor countries could drive up food prices.
Still, even here at the food aid conference organized by the Department of Agriculture and the Agency for International Development, some participants were talking up approaches that would sound heretical to old-line champions of food aid.
Marv Baldwin, president of the Foods Resource Bank, a Christian nonprofit group dedicated to fighting hunger, described how more than a thousand farmers have turned American-style food aid on its head. They are raising farm animals and growing crops on some 7,000 acres across America. They donate their land, labor and the use of their equipment, and church groups help raise cash for fuel and fertilizer. But instead of shipping the crops and animals to poor lands to feed the hungry, the farmers sell them in the United States. The Foods Resource Bank then spends the money from those sales in developing countries to buy seeds, fertilizer, tools and other goods poor farmers say they need to grow food for their families.
Vernon Sloan, 81, used to donate and ship corn he grew on his 200- acre farm in Ohio to Haiti, Liberia and Angola to feed the hungry. But after years of working with the Foods Resource Bank, he said in an interview, he concluded that it was more practical to sell the crops here, avoid the huge shipping expense and use the proceeds to help farmers in Africa support themselves. “It’s what’s needed there,” he said, “rather than what we think they need.”
CROP PRICES SOAR, PUSHING UP COST OF FOOD GLOBALLY
By Patrick Barta
Wall Street Journal
April 9, 2007
Soaring prices for farm goods, driven in part by demand for crop-based fuels, are pushing up the price of food world-wide and unleashing a new source of inflationary pressure. The rise in food prices is already causing distress among consumers in some parts of the world — especially relatively poor nations like India and China. If the trend gathers momentum, it could contribute to slower global growth by forcing consumers to spend less on other items or spurring central banks to fight inflation by raising interest rates.
Politicians in markets where food costs are a particularly sensitive matter are moving to counter rising prices before they take a bigger economic toll or fuel unrest. But it remains unclear whether those policies will be enough to contain the current pressures, or whether a longer-term bout of food-price inflation — similar in ways to the recent climb in prices for oil and other commodities — is in the offing.
One of the chief causes of food-price inflation is new demand for ethanol and biodiesel, which can be made from corn, palm oil, sugar and other crops. That demand has driven up the price of those commodities, leading to higher costs for producers of everything from beef to eggs to soft drinks. In some cases, producers are passing the costs along to consumers. Several years of global economic growth — led by China and India — is also raising food consumption, further fanning the inflationary pressures.
Food-price inflation has been climbing — in some cases sharply — in India, China, Europe, and even smaller economies like Turkey, South Africa and Poland. In Hungary, it is running at more than 13% a year, compared with less than three percent in 2005. In China, food prices are climbing at a six percent pace, more than three times the speed of a year ago. Prices are also up in Germany, Italy and the United Kingdom. They may even be picking up in Japan, the world’s second-largest national economy, though the signs are tentative since overall prices there are only just starting to rise after a prolonged economic downturn.
The U.S., too, is seeing some stirrings, with food costs rising 3.1% in February from the year before — a rate one percentage point higher than in mid-2005. Economists say U.S. food prices are expected to rise faster than the general rate of inflation this year. Wholesale prices of meat, poultry and eggs have already increased.
If the trend continues, U.S. consumers are likely to see higher prices at the supermarket for everything from milk to cereal to soda pop, since corn is used to feed livestock and make high-fructose corn syrup, a key ingredient in many soft drinks. A spokesman for the National Chicken Council, a poultry-industry group, recently testified to a congressional subcommittee that Americans should expect higher chicken prices because of what the group described as “the ethanol crisis.”
Doomsday predictions of a major food shortage in China and elsewhere have circulated for years but haven’t materialized. And some economists believe the recent increase in crop demand probably can be met without severely straining the global economy. They think prices could come back down over time, especially if some countries that have more land that could be put under cultivation — particularly Brazil — can greatly increase production. Technological advances, such as better seed varieties, could also help boost production to keep up with demand.
In the meantime, higher farm prices aren’t bad for everyone. They could help boost incomes for the rural poor in developing nations, who have been bypassed by gains in the manufacturing and service sectors. In some cases, the rising demand for food also reflects the growing wealth of once-destitute populations around the globe.
So far, higher prices haven’t sparked a major rise in overall global inflation, which remains relatively low and stable by historical standards. Moreover, food prices are notoriously volatile, and some of the increases are due to short-term or local factors that could reverse in time. But many economists believe the forces causing the current bout of food inflation will persist, or recur in years ahead. Many countries are facing shortages of land and water that didn’t exist during past food-price spikes, so they can’t easily plant more to ease the strain.
Researchers at Swiss bank UBS AG note that average food prices in China have grown faster in the past five years than in the previous five, as more agricultural land is taken up for factories or high-rise condominiums. Changes in diets are also exacerbating the problem, as rising incomes allow the Chinese and consumers in many other places to eat more.
Some economists contend that China and India appear to be reaching a point at which nothing short of a bumper crop of key commodities will be enough to meet local needs and prevent further surges in food prices. In fact, China and India have achieved historically high production of some crops in recent years, only to see prices continue to climb.
Global grain stocks are at their lowest level in 30 years, after several years of strong global economic growth, and could become even tighter if farmers divert more crops to make ethanol or other fuels. By some estimates, about 30% of the U.S. grain harvest is likely to be devoted to ethanol production by 2008, up from 16% in 2006. All of this puts the world’s central banks in a bind. Although they have confronted spurts in energy prices, many of them haven’t had to cope with prolonged increases in food prices since the 1970s. Since then, food-price inflation has remained relatively benign, even as incomes world-wide have climbed, allowing consumers to beef up their diets.
In more recent years, central banks have tried to ignore surges in food prices as long as they didn’t get too out of hand, mostly because they tended to be short-lived. A change in weather, for example, could quickly turn a food shortage into a glut, sending prices tumbling. But a more sustained bout of food-price inflation, if it emerges, could force banks to keep interest rates higher than they would otherwise be. India, for one, has increased interest rates several times over the past year in part to combat food-price inflation.
“In 1972, the last time grain stocks were this low, the story didn’t end well in terms of inflation,” says Carl Weinberg, chief economist at High Frequency Economics in Valhalla, New York In those days, inflation soared not just because of higher oil costs but also because of a global jump in food costs, all of which helped trigger a major U.S. recession and a global slowdown. “Food prices were an important part of what started [inflation] rolling” in the 1970s, Mr. Weinberg says.
But since the 1970s, the Federal Reserve and some other central banks have come to believe that they can avoid raising interest rates in the face of transitory increases in food and energy prices if they have established enough credibility as inflation fighters to keep such price increases from spilling over to the rest of the economy.
Today, the inflation risks may be greatest in developing economies. In the Philippines, food accounts for 50% of the basket of goods included in the consumer-price index, an inflation benchmark. In Thailand, it’s about 35%, according to data from Macquarie Bank Ltd. In the U.S., food makes up only about 15% of the CPI. In one bustling open-air market in downtown Shanghai, shoppers say they are paying as much as two times the price they paid last year for green vegetables, and the cost of meat and vegetable oils have also soared.
Such blows to the pocketbook “give us more pressure for daily life,” says Xu Wen, a 53-year-old retiree who was purchasing some rolled noodles in a small shop last week. Already, she says, she and her husband are spending almost half their monthly income on food — a percentage that continues to increase over time. “We ordinary people have no way out,” she says. “This is something the government needs to be concerned about.”
Government officials are taking pains to show they are addressing the problem. In December, Chinese Premier Wen Jiabao toured a Beijing supermarket to check up on prices, and China has begun limiting the construction of corn-based ethanol plants to ensure there is enough corn for humans and livestock. Chinese officials have even banned new golf courses on farm land and have been unwinding subsidies they once paid to grain distributors to sell excess corn overseas. Still, analysts estimate Chinese stockpiles of surplus corn now stand at only about 30 million metric tons, down from more than 100 million tons at the end of the past decade, as demand picks up. (The Chinese government doesn’t provide official estimates of its stockpiles).
That would imply that China only has two to three months of surplus supply based on current consumption trends, making the country highly vulnerable if it has a bad crop. Although China remains a net exporter of corn now, analysts believe it will become a net importer sometime in the next few years. Some economists say China will have to take more aggressive steps to prevent future food problems. These changes could include allowing the proliferation of large — but more efficient — corporate farms similar to the ones that drove many small growers out of business in the U.S. in recent decades. Such a push would be extremely difficult for China because it needs to preserve jobs for the tens of millions of people who live in rural areas.
Pressures are also building in India. Monika Katyal, a 32-year-old homemaker, complains that she has had to cut back on purchases of many luxuries, such as cosmetics, as her family’s monthly bill for groceries has climbed as much as 50% in recent months. “I came here to do some shopping for myself, but now it doesn’t look like I will be able to do that,” she said recently, as she studied the price on a bottle of ketchup in a New Delhi grocery.
In addition to raising interest rates, Indian officials have also lifted import duties on corn and barred exports of wheat, to make sure supplies are available for domestic consumption. But it isn’t clear whether those and other moves will be enough to make a big difference in the long run. The main problem is that yields of some crops aren’t growing fast enough to keep up with India’s rapidly increasing food demand. India’s corn production, for example, has climbed about four percent a year since 2001, says Amit Sachdev, a New Delhi-area agriculture-industry analyst, while demand has been increasing nearly 5.5% a year.
“If I look at the trend line, [it] indicates to me that the requirements are going up much faster than what you can produce” in India, he says.
Lauren Etter, Conor Dougherty, Hanting Tang, Kersten Zhang and Binny Sabharwal contributed to this article
TYSON FOODS AND CONOCOPHILLIPS TO PRODUCE DIESEL FUEL FROM ANIMAL FAT
By Clifford Krauss
New York Times
April 17, 2007
HOUSTON, Texas — Tyson Foods and ConocoPhillips have cooked up a new recipe for your pickup truck.
The two companies announced Monday that they were forming an alliance to produce and market diesel fuel made from pork, poultry and beef fat. It was another sign that farmers and agribusinesses, which are now producing corn for ethanol, will be playing an increasingly large part in the country’s energy future. The new brew should be available at the neighborhood filling station by the end of the year.
The companies said that the diesel, which will be shipped and distributed through existing pipelines from ConocoPhillips refineries, would burn cleaner than conventional diesel. Much of the feedstock for the fuel will come from several Tyson rendering plants. “This strategic alliance is a big win for the entire agricultural sector because it paves the way for great participation of fats and oils in renewable fuels,” said Richard L. Bond, Tyson’s president and chief executive.
ConocoPhillips, the third-largest American oil company, began producing some diesel from soybean oil last year at a plant in Cork, Ireland. The processing technology for the fat-based diesel was developed and successfully tested at the Irish plant. The oil company’s alliance with Tyson indicates an even greater interest in pursuing biofuels; several other companies including Chevron and BP have expressed similar interests recently.
Efforts to reprocess animal fat will begin at some Tyson plants by the end of the year, and production is expected to reach 175 million gallons a year by 2009. That represents about three percent of the diesel produced by ConocoPhillips in the United States. A total of 250 million gallons of biodiesel was produced in the United States last year, a minuscule percentage of the total American diesel market. But biodiesel production is expected to grow to 1.2 billion gallons a year in about a decade. ConocoPhillips disclosed it was spending up to $100 million on the project. Tyson indicated it would invest a smaller sum.
“ConocoPhillips believes the key to a secure energy future is the development and efficient use of diverse energy sources,” said James J. Mulva, the chairman and chief executive. Mr. Mulva added that the program would help “reduce greenhouse gas emissions,” which scientists have linked to global warming. At a news conference here, Mr. Mulva said the new source of biodiesel, though relatively small, would help the country meet its energy needs. “In a tight market every incremental increase helps improve supply availability and reduces retail price pressure,” he said.
BP has been working with DuPont for several years to make new biofuels, including biobutanol, a substance that has similar uses to ethanol but can possibly be shipped by pipeline. It is made from sugar beet stocks.
Chevron formed a strategic research alliance last year with the Georgia Institute of Technology to make cellulosic biofuels out of wood or switchgrass. It also invested in a biodiesel plant in Galveston, Texas, which uses soybean oil as a feedstock. The plant will have the potential to produce 100 million gallons a year.