[Vnbiz] Riots over grain prices call for a rethink of global stability based on better farming.

[Tran Dinh Hoanh]

Daer CACC,

Rethinking global stability in term of food security obviously requires
better farming techniques.  But there are 2 immediate things we can do:

1.  Preserving farm land:  We have talked about this last week or so.  The
prime minister has just ordered cities to review golf course investment
projects to see if some of these projects should be closed to save land.  We
need to be conscious about using land.  Once the land is used for other
things (like building a city block) it is impossible to revert its use back
to farming.  Converting farmland into other usage is a one-way decision.  We
need to  be very careful about it.  Whatever people may say about farming,
the fundamental truth is that farming needs land.  Don't forget that.

2. Growing more food, such as planting the third rice crop in Vietnam.  This
seems to be easy, but economics may require that we watch what we grow,
because growing too much of a thing and creating its surplus in the world
market will simply send farmers into bankruptcy.

3.  Increasing storage capacity. If we have better storage capacity for food
surplus, it is not only a good security measure but also a good method to
stabilize agriculture market--in a year of big surplus, the government can
buy the surplus to put in storage instead of allowing the price to collapse
and knock out farmers.  Farming depends so much on whether and involves so
much natural risks (i.e., weather) that the government needs to have a good
mechanism to stabilize agriculture market, in a year of too good of
a havrvest as well as a year of bad harvest.

Food shortage will be with the world for a number of years, so we need to be
well prepared for it now.  BTW, probably rice trading companies' stock price
will rise steadily from now.  So you stock traders may want to buy
rice-company stocks on Monday?

Have a great day!

Hoanh
______________




http://www.csmonitor.com/2008/0407/p08s01-comv.html

 Price shock in global food Riots over grain prices call for a rethink of
global stability based on better farming.

from the April 7, 2008 edition
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Americans may fret that Wheat Thins cost 15 percent more than a year ago but
in poor nations, such price hikes aren't taken lightly. In Ivory Coast last
week, women rioted against higher food costs, leaving one person dead.

In Haiti, four people were killed in protests last week over a 50 percent
rise in the cost of food staples in the past year. From Egypt to Vietnam,
price rises of 40 percent or more for rice, wheat, and corn are stirring
unrest and forcing governments to take drastic steps, such as blocking grain
exports and arresting farmers who hoard surpluses.

The UN International Fund for Agriculture predicts food riots will become
common on the world scene for at least a year. The World Bank says 33
countries face unrest from higher prices in both food and energy.

Even in grain-rich America, wholesale food prices are rising at a rate not
seen in 27 years. The most acute "ag-flation," however, is in Asia and
Africa, where food costs take up a higher proportion of family income. And
the face of hunger is now seen more in cities as a historic shift takes
place with more than half of the world's population soon to be living in or
near urban areas.

The food price hikes may not be temporary, according to the UN World Food
Program, which sees long-lasting causes, such as spreading deserts and more
demand for grain-fed meat. The WFP itself, which feeds about 73 million of
the most destitute people, warns its rich donor nations that it will require
more money for some time to come. Its latest need: $500 million more by May
1.

The food price crisis has created a welcome stir about government policy.
Last week, World Bank President Robert Zoellick called for increased
agricultural production in poorer nations while warning rich countries not
to set up more trade protection and subsidies for farmers. "This economic
isolationism signals a defeatism that will reap losses, not the gains, of
globalization," he said.

Indeed, a government's attempt to control food markets, either for farmers
or for urban dwellers, often creates the kind of distortions that contribute
to higher prices. One of the worst examples is a rush by Europe and the US
to devote more farmland to growing biofuels – a dubious action to curb
greenhouse gases. In 2008, about 18 percent of grain in the US will go to
make ethanol and, according to the Earth Policy Institute, such production
over the past two years could have fed nearly 250 million people.

UN officials are split over their high priority given to biofuels in the
fight against climate change, with Secretary-General Ban Ki Moon now
suggesting a review of that policy. But international bodies also need to
review reduced investment in agricultural productivity. A second "green
revolution" from scientific research, like that seen during the 1960s, could
transform farming once again.

In Asia, where two-thirds of the poor live, growth in farm productivity is
down to 1 percent a year compared with 2.5 percent two decades ago. More
money needs to go toward research in creating new strains of grain and
toward better irrigation. Too many nations are rushing to industrialize and
urbanize at the expense of farmers.

Food riots signal the need to rethink global stability and the critical role
of those who till the land and feed us all.
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