Is There a Global Food Crisis?

Prices are rising, but that’s not the whole story.

Editor’s Note: Reason columnist Veronique de Rugy appears weekly on Bloomberg TV to separate economic fact from economic myth.

Myth 1: Because of the financial meltdown, and its repercussions on aid, the scale of hunger that we see now is unprecedented; more people face starvation related to disasters than ever before.

Fact 1: In fact, while unacceptably high, starvation deaths per year have been declining for the past 60 or 70 years. Better publicity, grain market integration, and work by aid agencies have decreased human deaths during each food crisis since the late 1950’s.

The latest available statistics indicate that some progress has been made towards achieving the first Millennium Development Goal, with the prevalence of hunger declining from 20 percent undernourished in 1990-1992 to 16 percent in 2010 (undernourishment describes the status of persons whose food intake regularly provides less than their minimum energy requirements). The Food and Agriculture Organization of the United Nations (FAO) estimates that a total of 925 million people were undernourished in 2010 compared with 1.023 billion in 2009. 

Myth 2: Congress says farm subsidies insure a food supply for the U.S. and for the world.

Fact 2: U.S. farm subsidies have exacerbated the balloon in world food prices. In fact, economists have found that abolishing domestic subsidies would actually lower world prices for these crops.

It is often said that without subsidies there would be a smaller food supply and hence, higher prices. This is a common rational behind farm subsidies. It’s quite the opposite. The economic literature shows that abolishing subsidies would actually lower the world price of crops.

Moreover, looking at the 2007 Farm Bill, Julian Alston estimated that eliminating U.S. crop subsidies (but leaving other subsidies and tariffs in place) would result in an increase in U.S. crop production by 7.3 percent. A supply increase leads to lower prices.

The chart below shows the impact that abolishing farm subsidies would have on the price of different commodities, using Alston’s estimates.

As we can see, with the exceptions of wheat and corn, the price of the other commodities would go down in the absence of U.S. subsidies.

Also, here is a World Bank study which focuses on the effects of removing rich country protection and subsidies in agriculture. It finds that poverty rates would fall in virtually all of the developing countries included in the sample, and do so as a simple consequence of the lower world prices for farm products.

This evidence puts lawmakers’ actions in perspective. In 2008, Congress overrode a presidential veto to enact farm legislation that extended existing supports and created new subsidy programs. The legislation added a “permanent disaster” program for areas frequently hit by adverse conditions, and it added a revenue protection program designed to lock in 2008’s high commodity prices. It also aided producers of specialty crops, such as fruits and vegetables with various new programs.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Fist of Etiquette||

    Do those 16% of undernourished in developing countries get enough ethanol in their fuel tanks? I don't see a chart for that.

  • ||

    Those kids in Iran were wearing skinny jeans and got their asses kicked. The Egyptians were not worried about fashion and they won. That tells me something and that is that nobody likes these skinny little pukes that are not masculine.

  • Marian Kechlibar||

    It is easier to kick out an old tired autocrat (Egypt) than an oligarchy (Iran) which has 1 million+ strong fanatical force (Revolutionary Guards) absolutely ready to kill their compatriots on a command.

  • ola||

    tell that to the iowa caucuseseseses.

  • ||

    Dummy can't read her own graph. It shows the % has increased from 2008 to 10.

  • Mensan||

    Apparently, you can't read the graph either, dummy.

  • ||

    Reading comprehension fail.

  • ||

    Big Ag has its hooks into both parties in the Senate Ag Committee.

    Grassley, Roberts, and Johanns are as Big Gov GOP as you can get. Stabenow and Harkin are just as bad.

    I got a kick out of the expensive F-35 engine costs that the Pentagon no longer wants.

    Boehner and Eric Cantor saved it because the two main feeder plants are in their districts.

    Teabaggers - the GOP says "fuck you".

  • Cyto||

    Jet engine parts made from corn and soy byproducts? Wait, what were we talking about...?

  • Doktor Kapitalism||

  • sevo||

    "Teabaggers - the GOP says "fuck you"."

    Ice-skate rentals and hot cocoa now available on the River Styx.......
    I agree with Shriek a second time.

  • Shrike's pal "Ethanol Al" Gore||

    Don't blame me for any of this -- I was trying to save.........

  • sevo||

    "I was trying to save........."
    Your sorry butt, you hypocrite.

  • ||

    A good article that focused on American food subsidies. This problem is everywhere, in Europe billions are wasted to support farmers. While this does seriously distort the markets for Europe, this has an ever worser effect on third world countries, its cheaper for some African countries to import Dutch milk, truly crazy.

    Then there are the countries that guarantee the cheap prices for food staples, which inevitably one day cannot be sustained anymore. Again subsidies that short sighted politicians use to buy votes.

  • ||

    A real problem developing in the body-politic is ascribing the rising food prices not to combined policy disasters but global warming. Another manufactured crisis to exploit is brewing that way.

  • Doktor Kapitalism||

    Plus several countries in Europe have banned genetically modified food, despite the fact that it would raise production. I guess that protectionism trumps actual welfare any day.

  • Metazoan||

    Plus some stupid fear of eating foreign DNA (as if it doesn't already happen when you eat an unmodified plant). Granted, fears of the protein product having allergic properties are not unfounded, but we can think in a levelheaded manner about this and not just scream OMG stop evil biotech!!!!!!

  • ||

    The numbers and text in the graphs are hard to read.

  • pmains||

    Usually, you can open the images in a separate tab and then zoom. (This may not work in IE or Firefox, but it does in Chrome.)

  • For Warty||

  • Almanian||

    The horror...the horror...

  • Juice||

    Did rich investors stop speculating in real estate and start speculating in food and other commodities? Yes. Yes they did.

    Those big spikes are market manipulations by commodities speculators.

    That's all.

    It's not global warming. It's not farm subsidies. It's effing Wall St. types playing around with the commodities markets.

  • sevo||

    "It's not global warming. It's not farm subsidies. It's effing Wall St. types playing around with the commodities markets."

    Naah....
    It's Elvis' alien love child day-trading from his/her lawn chair on the Grassy Knoll!

  • Al Gore||

    It's global warming.....is to!

  • Man-Bear-Pig||

    The greatest trick I ever pulled was making the world believe i didn't exist!

  • CSI||

    Sure fossil fuels are running out, soils degrading, fresh water depleting, climate changing for the worst - but I think we'll avoid a Malthusian disaster, if only by the skin of our teeth.

    Technical innovation will help, but mainly because birth rates are dropping rapidly worldwide. This is good, and if they drop below replacement level - even better. The world is overpopulated and natural attrition is the best way to reduce population. Better an aging population and stagnant economies than massive famines.

  • sevo||

    CSI|2.11.11 @ 10:02PM|#
    "Sure fossil fuels are running out, soils degrading, fresh water depleting, climate changing for the worst"
    Cites, please.

    "but I think we'll avoid a Malthusian disaster, if only by the skin of our teeth."
    Bull...............
    shit.

    "The world is overpopulated"
    Bull................
    shit.

    "Better an aging population and stagnant economies than massive famines."
    DING-DONG!
    We have a gold-metal winner in the "False Dichotomy" competition!

  • CSI||

    So 7 billion people is just enough people? Not enough? If not enough - what should the world's population be - 9 billion? 15 billion? 20 billion? Or do you subscribe to the Julian Simon school of thought that the world can support an effectively infinite population?

  • War'n'Famine||

    I am the Malthusian's hope and dream.

  • Flood||

    And I their wet dream.

  • sevo||

    "Or do you subscribe to the Julian Simon school of thought that the world can support an effectively infinite population?"

    First, asshole (let's make it clear that your stupidity deserves that label), Simon never claimed that the world can support an infinite population. Is that clear, asshole?
    Now, care to support your ignorant claims, asshole? Or would you rather just get burned by your strawmen?

  • MrGuy||

    Asshole

  • MrsGuy||

    Double asshole!

  • ||

    I love the implication that we've gone beyond some imaginary population equilibrium, and therefore must forcibly keep people from having the kids they want to have.

    Keep it statist, yo.

  • Doktor Kapitalism||

    Birth rates are dropping in industrialized nations. They're still high everywhere else except (sorta-kinda) in China. Only by industrializing nations can we get birth rates under control without wholesale abrogation of individual rights. And no one can industrialize when they have nothing to eat.

    Fossil fuel are running out, but uranium oxide reserves are double remaining reserves all fossil fuels. Electricity isn't a real problem. Industrialized nations can convert to nuclear, and fossil fuels can be used as "industrialization fuels" in developing countries.

    Soil is somewhat depleted, mainly because the nutrients that were in the ground are now in human bodies. So that much is true. But I don't think that we're in serious calamity state, by any means. There are plenty of untapped soils in otherwise unappealing climates. They could possibly be imported to places where plants prefer to grow.

    If people would just invest in the proper filters, we'd have no freshwater problem.

    Prove the climate's changing.

  • sevo||

    OK, I blew off the asshole because s/he deserved it. But while the asshole will never read it, there's reason to deal with the claims in some detail:
    1) "Fossil fuels are running out."
    Yep, they've been "running out" since the day they started leaking to the surface in PA, CA and probably other locations.
    It's a meaningless statement, similar to the comment that "we only have X years of oil 'reserves'". Of course we have only X years of known reserves, since no one in their right mind is going to prospect for oil beyond X years. We now have (AFAIK) 20 years' 'reserve' just as we had when I first read that headline in the mid '50s that 'we're running out of oil!'
    2) "fresh water depleting"
    No, there is an increase in "fresh water", and there would be a greater increase if "fresh water" were market-priced. In most of the world, potable water is politically priced, such that we use it to hose-down the driveway and grow lawns in deserts. I don't care if we do, but pay the costs, and don't claim the wastage means 'we're running out of water'
    3) "Soils degrading"
    Yep, same as the pot on the deck; pretty poor stuff in there. And for soil-degradation, hardly anyone can match stone-age slash-and-burn agriculture. Again, a meaningless statement unless you want to quantify it, which eco-religionists don't want to do.
    Further, ending stupid 'farmer' (read ADM) subsidies would keep soils from 'degrading' the world over.
    4) "climate changing for the worst"
    Assertion without evidence. Not worth further comment.
    5) "The world is overpopulated"
    If the world is now "overpopulated", there must have been a time when the world was "just-right-populated". Any asshole who makes this claim is now stuck with the requirement of stating when that was, and telling us how wonderful things were at that magical moment.
    Anyone who actually looks at evidence rather than repeats a mantra would see that, so far, as population has increased, so has human welfare.
    There is some limit, undoubtedly, but eco-relisgionist don't bother addressing that question in reasonable terms.

  • JoshInHB||

    Do you think that a finite amount of fossil fuels exist on earth?

    If so, how long before peak production happens? The real question, is how long the supply of fossil fuels will rise, driving the price for those fuels ever lower in real terms. That is something that is calculable based on the historic yield curves of producing sites, their geographic distribution and consumption trends.

  • ||

    People have been trying to do that for decades and it always comes to the same result, we're running out of oil in X years.

    It never runs out in X years though, proven reserves are at all time high. I wonder why that is?

    Libertarians need to stop asserting that the climate isn't changing. Of course it's changing. It's always changed and it will always change. The real question is "So what?"

  • JoshInHB||

    Yes climate change is a natural phenomena that humans have adapted to for millennia. AGW even if it is true is just more of the same and not a pending catastrophe.

    WRT Peak oil
    If oil is the detritus of ancient organisms then there is a definite finite amount in existence. The economics of peak oil predict that over the long term the price of oil will fall until the production peak happens at which point prices will continuously rise. Running out of oil is not the prediction, the fact that people have erroneously called a peak in the past does not invalidate the theory either.

  • sevo||

    "If oil is the detritus of ancient organisms then there is a definite finite amount in existence. The economics of peak oil predict that over the long term the price of oil will fall until the production peak happens at which point prices will continuously rise."

    Even if it is the result of other mechanisms, it's still finite, as is all matter.
    And, agreed, the price will sooner or later start a continuous rise (if governments don't intervene), chasing oil into its highest and best use, while other forms of energy conversion will supplant oil for other uses.
    None of which makes CSI's rant relevant.
    And my gripe about climate change was this: "changing for the worst"
    How in hell can anyone make that claim?

  • JoshInHB||

    And my gripe about climate change was this: "changing for the worst"
    How in hell can anyone make that claim?

    They can't.

    AGW theory as generally argued includes all of the following;

    1) The earth is getting warmer

    2) That warming is caused by human activity

    3) That warming will have catastrophic consequences for humans

    4) Governmental action can prevent the warming.

    Number 1 may or may not be true.

    Number two is unprovable.

    Number three is factually false. Historically warmer periods have always been better for humans than colder periods.

    Number four is also false although it is an article of faith for socialists.

  • Metazoan||

    A serious question- and don't dismiss it as "socialist," because I am not a socialist.

    To whom does biodiversity belong? By that I am referring to the inherited treasure of billions of years of biological evolution, ranging from the countless species of bacteria and archaea to the plants whose massive array of secondary metabolites may be able to cure myriad diseases, to the animals that these plants require for pollination, etc.
    You can say it belongs to whomever is in possession of the land (or sea, I suppose) in which it dwells. But then are you really saying that it's fine to you for a few governments and corporations to destroy that inheritance?

    I am a libertarian, but I am very turned off by the immature attitude that most of my fellow libertarians take toward these (environmental) issues. I'm not saying that the standard argument is necessarily wrong- I'm just saying that it's childish and stupid to dismiss anything besides your orthodoxy as socialism and therefore wrong.

  • sevo||

    "To whom does biodiversity belong?"

    Who owns all the exterminations of all the possibly wondrous cures for cancer?
    Stuff happens; nothing guarantees the best outcome.

  • JoshInHB||

    Even if it is the result of other mechanisms, it's still finite, as is all matter.

    Sure,

    But, if it is a residue of biological activity then it has a much lower supply than other, naturally occurring minerals.

    Copper for example, has seen demand grow causing a rise in prices over the last decade. However, estimates for the amount of Copper in Earth are approx 1.2billion kg for every person on earth. Last year 1.3 kg per person was mined throughout the world so the supply is essentially infinite.

    That is not the case with oil or other fossil fuels due to their origins.

  • ||

    RE: JoshInHB|2.13.11 @ 7:16PM|#

    I don't think we've tapped into half of the oil that exist on earth, the problem comes from getting to it. Also, knowing the way our government thinks, there is most likely a sizable amount of oil to be had from under our own soil. But it's better for us if the rest of the world depletes their supply, thus giving us the upper hand in the energy market.

    (I realize that's very conspiracy theoryey of me)

  • Marian Kechlibar||

    Both the water problem and the overpopulation problem are regional phenomena, so it does not make sense to say that the 'world' is overpopulated.

    Nevertheless, some regions of the world are definitely overpopulated. The Egyptian Nile's delta is a good example. Head over head.

    And some regions of the world do have serious problems with water. Northern China is one, Iraq is another. In case of northern China, bad governmental policy plays a great role; in Iraq, it is a 'physical' shortage caused by water engineering upstream in Turkey and Iran, and it well may lead to war in future decades.

  • sevo||

    "Nevertheless, some regions of the world are definitely overpopulated. The Egyptian Nile's delta is a good example. Head over head."

    Not unless Monaco is:
    http://en.wikipedia.org/wiki/L.....on_density

  • Byron||

    Yes, it's overpopulated with Bugattis and Bentleys.

  • sevo||

    "Yes, it's overpopulated with Bugattis and Bentleys."
    My kind of "overpopulation"!

  • Barney The Frank||

    Hey I have skin on my teeth....foreskin!

  • Mao Zedong||

    You rang?

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  • Foul Bachelor Frog||

    Okay, but food has definitely become more expensive. So has gasoline. Indeed, basically all necessities have become more expensive in this country in the past few years. Of course, they'll claim there's no inflation because flatscreen TVs and other luxuries have gotten cheaper, but the things you actually have to buy if you want to continue living have become more expensive.

  • Foul Bachelor Frog||

    "Those big spikes are market manipulations by commodities speculators."
    Well, in the case of food, that would only be true if the commodities speculators were buying food that was already on the market and hoarding it. Since food is rather expensive to store for long periods of time, and is at least semiperishable, I'm going to hazard a guess that teh speculartorz are not to blame in this case.

  • Foul Bachelor Frog||

    Interestingly enough, the chart shows food prices peaking right before the financial crisis, falling, and then rising again after the stimulus and bailouts. We've exceeded the previous peak: Does that mean we're in for another crisis soon?

  • Gregory Smith||

    We have to stop subsidizing ethanol, it is driving the price of corn up.

    If ethanol was sold at its real cost nobody would buy it.

    Black Chamber of Commerce: Did Obama Lie to Us? Oh yes he did!
    http://libertarians4freedom.bl.....obama.html

  • Doktor Kapitalism||

    Plus it depletes the food market on corn, and encourages people who would have grown more nutrition crops to grow corn.

    http://reason.tv/video/show/ethanol

  • Charley Sheen||

    "If ethanol was sold at its real cost nobody would buy it."
    I would!

  • Gregory Smith||

    Do you even have a diesel car?

    Black Chamber of Commerce: Did Obama Lie to Us? Oh yes he did!
    http://libertarians4freedom.bl.....obama.html

  • Random Dude||

    Ok, so, averaged numbers are absolutely worthless in analyzing the impact of food prices in global inflation.

    No, we don't have a food crisis or need subsidies, but let's recognize that our bad monetary policy does in fact create scarcity in the 3rd world by extracting wealth from them by proxy of the reserve currency.

    Also, does anybody remember this? We're roughly in the same stage of the artificial credit cycle. It should be fairly obvious that our super-SIV, TALF and TARP, as well as QEI and QEII overlay quite nicely with the inflation effects on the U.N. food prices graph from the article.

  • ||

    Good thing this got on TV! We need to bring this issue back into the proper paradigm so that the serious decision makers on the left and the right can argue about it properly.

    So lets leave monetary policy out of it. I'll frame this the correct way.

    Dialectic option 1:
    The world is getting better every year prices have not gone up at all in 2010-2011. Inflation is like 1% or 2%. If you ingore total starving people and just count it as a percentage, then we are doing much much MUCH better than in 1890!! Therefore we should stop examining this any more.

    Dialectic option 2:
    The foot shortage is caused by global warming, we need to tax carbon dioxide in order to save people from starvation!
    2a.
    We need more government agencies(preferably at the global level) to make sure that we have proper programs in place to solve the food insecurity problems we obviously face.

    If you do not agree with one of these options you do not belong on TV because you are probably off your meds or a gadfly.

  • ||

    Death by starvation is down a percentage. Death by complications (and diabetes) directly related to poor nutrition is up by a huge percentage.

    I'm not saying we need to regulate, but I am saying some of these facts are cherry-picked.

    The definition of undernourishment used here is not intaking "minimum energy requirements".

    So, what we are saying is that caloric intake = nutrition.
    That is like saying a .22 revolver and a .223 AR-15 would both meet basic national defense needs, since they are almost the same caliber. Specious logic, at best. Deceptive, at worst.

    Again, I'm not saying we should regulate what people eat.* We just shouldn't present biased information to win our arguments.

    * Well, actually we should regulate what we eat, but the government shouldn't.

  • cynical||

    What tpeople making idiotic lifestyle choices have to do with people that can't afford to feed themselves?

    Don't assume that it's about money -- the alternative to smoking is "not smoking", which is free, but people still smoke.

    The issue of malnourishment due to deprivation is, in the short term, a question of calories.

  • ||

    Yes because obviously the death of a child at 8 due to unavoidable poor nutrition is equivalent to the death of fat, lazy, relatively rich old person due to diabetes. That's the amazing Noam Chomsky logic.

  • Anonymous||

    s/rational/rationale/

  • ||

    Perhaps I didint read the article properly but can someone explain to me HOW ending farm subsidies would lower the prices of crops?

  • ||

    The article doesn't really go into it but subsidies in many industries act as a form of protectionism. The sugar industry is the biggest example of this where excess sugar is bought by the US gov't and Caribbean sugar farmers aren't allowed to sell their sugar for lower prices in the US market.

  • sevo||

    "...HOW ending farm subsidies would lower the prices of crops?"

    A lot of what's called "subsidies" are actually "price supports", meaning you, as a farmer, are paid more than an undistorted market would pay.

  • ||

    The article is mis-titled. It is mainly about the lack of need for subsidies, a political matter, as opposed to a thorough analysis of possible food shortages.

    The green revolution was mainly due to the availability of cheap water from acquifiers that don't replenish. These aquifiers are now drying up in China and India, the areas with the greatest needs. Food production can only be increased on marginal lands at much greater expense. Higher prices are here to stay.

  • ||

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  • Ken||

    What is really driving up the price of food is oil. Its used in every step of farming, from making fertilizer, to transportation, to making pesticides and so on. Food will definitely get more expensive as oil prices rise.

  • ||

    Subsidizing madness!

  • ||

    Agricultural subsidies depress local economies in developing countries contributing to poverty and hunger. An increase in supply will not necessarily lead to a decrease in food prices. Agricultural subsidies cause overproduction and artificially low priced food that is dumped into other markets or into our cars.

    Grain and fuel speculation, agro-fuels, environmental changes and increasing meat consumption are some of the proximate factors causing current high food prices and thus hunger and food rioting.

    To separate the myths from the facts, read the real story behind the crisis that addresses the root causes of the global food crisis as systemic failures of the current industrial agri-foods system. Food Rebellions! Crisis and the Hunger for Justice written by Eric Holt-Giménez and Raj Patel with Annie Shattuck offers an understanding of the global food crisis and documents grassroots solutions to hunger and poverty. https://www.foodfirst.org/en/node/2387

  • ||

    Food prices have nothing to do with monetar policy. The world is getting better every year and the last thing we need to do is question the need for centrally planned economies.

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