The Price Is Fright
Is America's reliance on cheap food over? Looks that way, as an onrush of complex factors unloose a perfect storm of spiraling costs. Agriculture policy and World Bank veteran August Schumacher Jr., recipient of this month's Silver Spoon Award, scrutinizes the spinning weather vane with an eye to the future.
| More 'Food Faces Change' articles in this issue |
| The Price of Purity Convinced that an ever greening public is willing to pay a little more, a young Argentine restaurateur is determined to take his organic concept national. |
| Seed Capital Heirloom tomatoes are much more than a menu item du jour or a glorious still life at the local farmers' market. They are part and parcel of preserving our agricultural heritage. Katy Keiffer reviews the definitive new book on the subject. |
| Awake at the Switch At a conference in Spain assessing the effects of global warming on wine production, Alan Tardi discovers that what's bad news for some is good news for others. |
| In for the Short Haul Careening fuel costs and demand for eco-friendly product are causing sharp swerves on the food distribution highway. Katy Keiffer spots some green lights at the end of long-distance tunnels. |
| Staving Off Extinction Biodiversity is more than a catchword, a liberal conceit, or a sentimental love of nature. It's a matter of life and death. Pulitzer Prize winning science editor Holcomb B. Noble reviews the new definitive work on the subject. |
| Plowing Toward Utopia Christopher Styler reports on the efforts to transform the American farm into a model of environmental enlightenment, community good, impeccable ethics, and, yes, gainful employment. |
| Massing Links Judith Weinraub speaks with environmentalist and social activist Paul Hawken about offtrack food practices and policies and what can be done to reverse them. |
| Weather Watch Agriculture savant Frederick Kirschenmann assesses the potential effects of climate change on farming in the United States and ways to ensure adequate food supplies in the future. |
| Silver Spoon August Schumacher Jr. |
For chefs, home cooks, and the poor, the era of cheap food may be over. American families today spend a little more than 10 percent of their disposable incomes on food at supermarkets and restaurants, a bargain compared to 15 percent in Europe and 60 percent for those in developing countries. But this may be changing.
The rapidly growing middle-class food demand in China and India, the impact of biofuel production on supplies of corn and vegetable oils in the United States and Europe, and skyrocketing energy prices continue to fuel the rise in food costs. Over the past year (2005/06 versus 2007/08), bushel prices of wheat have increased 94 percent, corn 100 percent, and soybeans 84 percent, according to the March World Agricultural Supply and Demand Estimates report, which provides the U.S. Department of Agriculture's forecasts of supply and demand for major national and global crops and U.S. livestock. Milk and eggs are at record highs. And at over $4 a gallon, diesel fuel costs are forcing long-distance truckers and local distributors to add fuel surcharges to their restaurant invoices. If these distribution costs continue to rise, restaurants could eventually add a fuel surcharge line after the tip line to customers' checks. The accumulated pressure of these costs has forced some brand-name food producers to cut back on production. For example, Maple Leaf Farms, the Indiana-based grower/processor of Pekin duck, announced in April that it would shut down its facility in Yorkville, Wisconsin, eliminating 175 jobs. Maple Leaf Farms co-president Scott Tucker cited the cost of corn "brought on by the government's misguided ethanol policies" as the major reason.
With inventory of wheat, corn, soybeans, and rice at the lowest levels worldwide in 30 years, any future droughts in the American Midwest, Australia, or the Ukraine would put extraordinary pressure on prices and especially increase the current level of volatility, which already is encouraging commodity speculators to take advantage of this food supply uncertainty. Strikingly, the price of rice, the staple grain for some 2.5 billion in Asia and parts of Africa, doubled in the spring of 2008, causing political unrest in poorer cities in Southeast Asia.
Globally, the United Nations said food prices increased nearly 40 percent in the past year. These levels are projected to continue, according to U.S. Department of Agriculture economists.
And domestically here at home, these increasing food costs are also impacting the millions of families on food stamps. Nearly 10 percent of America's families are now eligible for food stamps, with 28 million persons receiving assistance each month. These rising food costs especially affect those families in our historically excluded urban communities, families who lack access to fresh, healthy, affordable, and sustainably grown foods—the food "deserts" of America. In reaction to these concerns, Robert B. Zoellick, president of the World Bank, in early April called for a New Deal for Global Food Policy, saying that "the realities of demography, changing diets, energy prices and biofuels, and climate changes suggest that high—and volatile—food prices will be with us for years to come. This New Deal should focus not only on hunger and malnutrition and access to food and its supply but also the interconnections with energy, yields, climate change, investment, the marginalization of women and others, and economic resiliency and growth. Food policy needs to gain the attention of the highest political levels, because no one country or group can meet these interconnected challenges."
Recognizing Zoellick's analysis, economists now are changing their minds on the longer term trends. Earlier American prognosticators felt high prices would "cure high prices." These analysts felt that food production would increase, farmers would react to price incentives, and supply would quickly expand. These price cycles in fact were the post-war norm.
Now, these same economists seem to be changing their minds, supporting World Bank estimates that longer term demand trends may move food prices up for some years to come. Grains and oilseeds especially may follow this price trend, affecting wheat, corn, and soybeans. The Financial Times of London (March 18, 2008) cites Food and Agriculture Organization studies that show that these trends are "structural, meaning that prices will not retreat to former levels."
Analysts at the British think tank Chatham House said in early 2008 that "society will have to decide the value to be placed on food." John Bruton, the European Union ambassador to the United States, said that the "world faces 10 to 15 years of steep rises in food costs, with the poor in Africa and Southeast Asia being the most vulnerable."
With world wheat stocks at a 30 year low, improvements in wheat breeding research have fallen behind the growth in acreage yield gains in corn and soybeans, further impeding wheat production gains. Droughts in key wheat countries such as Australia, combined with very low American and worldwide inventory, have impacted bread and pasta prices, with baking companies flocking to Washington to ask Congress and the federal government for policy changes to encourage more wheat supply in the United States. A cotton farmer in Alamo, Tennessee, says, "Today, we have 80 cent cotton, $5 corn, $13 soybeans, and $10 wheat. This is the first time in my 47 years growing crops that all four commodities have gone up at the same time."
Over the past decade, millions of Chinese families have emerged from poverty to earn incomes that enable them to purchase more meats and vegetables. To meet these new demands, the Chinese pig population, consuming vast quantities of corn and soybean meal, is growing rapidly to provide protein to this expanding middle class. In China and other emerging economies, hundreds of millions of families now enjoy enough income to eat meat, pressuring critically short feed grain supplies. This tremendous growth, now called the developing country "nutrition transition," continues to pressure corn and soybean supplies worldwide. China now imports 45 percent of America's soybean exports. Diet changes in India, Nigeria, and Indonesia are pressuring wheat supplies as their consumers shift from rice to bread.
Here at home, consumers are demanding fresher foods, produce and proteins with better taste, and foods with fewer travel miles. American foodservice companies and supermarket chains are reacting to these changing demands and tentatively, perhaps too tentatively, exploring more regional and local procurement to minimize transport costs and highlight sustainably grown local foods. Firms such as U.S. Foodservice, Sysco, Whole Foods, and Sodexo explore regional and local procurement, in part encouraged by the increasing popularity of local farmers' markets and community supported agriculture.
Major California vegetable farmers are going "East Coast" to establish farms in Maine, North Carolina, and Quebec for lettuce, broccoli, and celery in reaction to high transport costs from the West Coast to the major northeastern markets, with long haul trucking needing $800 per day just for fuel.
Chefs already purchasing locally are increasing their outreach, accommodating their customer preferences for nearby grown foods but also saving on long-distance fuel surcharges. The Clyde's Restaurant chain in metro Washington, D.C., continues to ramp up their local purchases. Michel Nischan's Dressing Room restaurant in Westport, Connecticut, buys 80 percent of its food locally. The executive chef at Django in Manhattan is expanding his Long Island and Hudson Valley procurement from local farmers.
In the forefront of this movement are an increasing number of college foodservice departments. These chefs are leading efforts to "buy fresh, buy local." Initially, they wanted to meet student preferences but more recently they see local procurement as a cost control measure. Ken Toong, the foodservice director at University of Massachusetts in Amherst, is pressing his food buyers to source 25 percent of their 26,000 students' daily food needs from close by in 2008—he is already at 22 percent in recent years. The New York Times reports some 200 colleges are following Toong's lead to buy more local foods.
Climate instability, lack of any national or international grain inventory, and export restrictions in key countries are combining to buttress these trends to a more local, regional, and sustainable food system.
The "Buy Fresh, Buy Local" mantra featured on coffee mugs and T-shirts, and often dismissed as a fad, may soon be mainstream. There will be no other choice.
