A new Dust Bowl? US drought can’t be separated from climate change
August 6, 2012

More than 50 percent of counties in the United States are now officially designated “disaster” zones. The reason given in 90 percent of cases is the continent-wide drought that has been devastating crop production. Forty-eight percent of the U.S. corn crop is rated as “poor to very poor,” along with 37 percent of soy; 73 percent of cattle acreage is suffering drought conditions, along with 66 percent of land given to the production of hay.

The ramifications of the drought go far beyond what happens to food prices in the United States. The U.S. producing half of all world corn exports. As corn and soy crops wilt from the heat, without coordinated governmental action, we can expect a replay of the disastrous rise in food prices of 2008, which caused desperate, hungry people to riot in 28 countries.

In that instance, food was available, but hundreds of millions of people couldn’t afford to buy it. Should food prices increase to anywhere near the levels of four years ago, it will be a catastrophe for the 2 billion people who are forced to scrape by on less than $2 per day.

The poor in developing countries spend 80 percent of their income on food, much of it directly as grain, rather than as manufactured products like bread or cereal, and so any increase in the price of basic necessities immediately puts them in dire food distress.

In the U.S., prices for a loaf of bread or a corn muffin are unlikely to see major increases because, in a nod to capitalist priorities, the cost of those products is largely determined by packaging, advertising, transportation and storage costs—and ultimately the labor that is embodied in those activities, not the cost of growing the corn or other natural base material.

However, because about one-third of corn in the U.S. goes to feed animals, the U.S. Department of Agriculture (USDA) predicts that the price of animal products such as beef, dairy products, chicken, eggs and turkey will increase by 4.5 percent or more, depending on just how bad the harvest turns out to be. There will be a similar impact on vegetable oil due to the dire predictions about soy production, though these effects will likely not be felt until early 2013.

The UN’s Food and Agriculture Organization (FAO) publishes its monthly Food Price Index figures on August 9. Abdolreza Abbassian, a senior economist at the FAO, commented, “It will be up…How much up is anyone’s guess.” Ominously, he adds; “It would really surprise me if we didn’t see a significant increase.”

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For the one in five children in the United States living in food insecure households and the millions of Americans living from hand to mouth, still trying to recover homes, jobs and a stable livelihood after the crash of 2008, let alone tens of millions of other poor people around the world, any rise in food costs will be a crushing—and for many, life-threatening—calamity.

With the possibility of food shortages, the vultures of finance, otherwise known as commodity speculators, will once again begin to circle the food markets, looking to make a killing. As the financial markets were not re-regulated after the economic crisis of 2008, hedge funds and short-sellers will inevitably be on the lookout for additional profits by gambling on the price of food, exactly as they did four years ago.

Rather than any lack of actual food, most analysis indicates that the primary cause of the dramatic escalation in food prices that caused the 2008 crisis was financial speculation in the food commodity sector. That is to say, it was a human tragedy manufactured by the laws of motion of capitalism, rather than the laws of nature.

The USDA could and should be taking pro-active steps to ensure that there is no replay of 2008 as the number of people who became “food insecure”—which is to say starving—topped 1 billion worldwide.

In the short term, any crop failures need to be compensated by changing the allocation of U.S. corn and preventing commodity speculation on food. In the longer term, measures to raise grain storage volumes; address infrastructure deficiencies through appropriate investment; re-evaluate inhumane, environmentally destructive and dangerously unhealthy industrialized livestock feeding practices; and examine the location, sustainability and type of crops and monoculture farming are all issues that need attention.

Up to now, however, Agriculture Secretary Tom Vilsack has resisted calls to reduce or eliminate the federal mandate that sees more than one-third of the U.S. corn crop diverted to ethanol refineries to make “bio-fuel” to burn in car engines. The federal government has mandated that over 13 billion gallons of ethanol is made from corn this year, which would equate to 40 percent of this year’s crop.

Supposedly adopted to reduce demand for “overseas oil” and associated geopolitical concerns after oil almost topped $150 per barrel in 2008, the Obama administration raised the federal requirement to 36 billion gallons by 2022, with at least 15 billion coming directly from corn.

Even on the best of days, turning corn into ethanol is an idiotic thing to do. Many studies have shown that it takes more energy to turn the corn into ethanol than is recovered when the ethanol is burnt in a car engine. Not only that, but ethanol doesn’t have the energy density of gasoline, so cars running on a mixture of ethanol and gasoline have to burn more fuel to go the same distance and the blended mix costs more to transport.

In any year, this is bad policy. In a year of extreme drought, it should be a criminal offense to waste food resources in this manner.

Additionally, in one of the more ridiculous circular irrationalities to emerge from the anarchy of capitalist decision-making, the cost of ethanol-blended gasoline in the U.S. is also on the rise. Growing crops in the West is heavily dependent on oil for fertilizer production and mechanization—to the extent that it takes 10 calories of oil to produce one calorie of food.

Immediate elimination of the biofuel mandate is a concrete step that Vilsack could be promoting, particularly after he predicted at a White House press briefing that the drought would cause “significant increases in prices” by the end of the year.

Oil companies, which are required to blend ethanol into gasoline as part of the inappropriately named “renewable fuel standard” (RFS), are allowed to carry RFS credits over year to year. They thus have 2.4 billion credits available to allow the continued acquisition of corn for ethanol refineries.

But it’s hard to imagine suddenly freeing up 40 percent of whatever remains of the U.S. corn crop for livestock and human use not having an impact on corn prices, even accounting for the activities of the oil companies. As Gawain Kripke, director of policy and research for Oxfam America has argued, “The federal government can…put an end to the biofuel mandates, which are diverting food into fuel, and work to cut greenhouse gas emissions, which are leading to ever more erratic and extreme weather.”

Vilsack should be arguing for such a policy shift. Significantly, Lisa Jackson, head of the Environmental Protection Agency, has the power to make it happen without waiting on legislation.

This is especially necessary as some experts are beginning to worry about next year’s crop. For much of the U.S. corn belt, the main precipitation period has already passed. So without some unseasonal weather events releasing massive amounts of rain, Mark Svoboda, a climatologist at the National Drought Mitigation Center, based at the University of Nebraska, has said that what matters is getting enough rain for the beginning of next year’s crop: “This drought isn’t going anywhere…The damage is already done. What you are looking for is enough moisture to avert a second year of drought.”

Vilsack could also offer to annul small farmers’ debts to the banks. The only step he’s taken in this direction is to allow farmers an extra 30 days to pay insurance premiums—as if an extra month is going to make any difference if you’ve got no crops to sell.

He could campaign for greater agricultural aid for farmers in the Global South, specifically to build food storage facilities. Investment in this kind of food infrastructure to smooth out the ups and downs of harvests was drastically cut in developing countries throughout the 1980s and ’90s as international lenders demanded reductions in government spending in exchange for loans. In addition, such insurance was seen as unnecessary when “the market” would automatically adjust for any shortfall; similarly, in the United States, grain reserves are low and unable to make up any deficit because of a reduction in grain storage.

Perhaps more importantly still, if Vilsack and the Obama administration in general had any concern for humanity and the world’s poor, they could begin an aggressive campaign to re-regulate financial speculation on food prices in international commodity markets. Such an attack on the bankers, stockbrokers and speculators would no doubt prove wildly popular.

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