The End Of Cheap Food  

Lately I'm finding a lot of the news is giving me a feeling of deja vu, as the events many in the peak oil world were predicting 3 or 4 years ago comes to pass and begin to generate news in the mass media - particularly oil prices, their impact on inflation, the aggravating impact of stepped up biofuel production on food prices, and (more tangentially) the unpleasant unwinding of the housing / credit bubble.

Here's a classic exmaple from The Observer, looking at food price inflation and asking "is this the end of cheap food". The New York Times has an article in a similar vein.

'It's going to be interesting,' says James Walton, chief economist with the food retail industry's education body, IDG. 'UK shoppers aged under 50 have so far never experienced food-price inflation.' Essentially, throughout most Britons' lifetimes, food has become cheaper. But, in December, the inflation rate (by the government's preferred consumer price index, the CPI) was 2.1 per cent, while for all foods it was 5.9 per cent. 'Habits will change, although it's unlikely we're going to see Soviet-style queues at empty shelves.'

However, label-watching may become a habit for those Edinburgh women, because - and all the analysts agree on this, if nothing else - this is only the beginning. Walton's organisation is funded by the supermarket industry, whose bosses are, in public, largely in denial about the significance of the price rises. But Walton, himself, forecasts two further years of similar increases, at least. All the indicators, the prices of every food staple, are on the up - wheat doubled in price at one point last year. 'It's something the industry has expected and is thus, hopefully, a manageable cycle,' he says. 'No hunger riots. But we have enjoyed food prosperity for a long time, and we're seeing the end of that.'

Others offer an even more bleak assessment. Jacques Diouf, head of the UN's Food and Agriculture Organisation, spoke recently of a 'very serious crisis' brought about by the rise in food prices and the rise in the oil price. Various global economic bodies are forecasting rises of between 10 per cent and 50 per cent over the next decade.

There have already been riots about food prices in Mexico, West Bengal, Morocco, Senegal and Yemen, although not in Edinburgh. But the factors behind the price rises in Leith are exactly the same as those in Mexico, or in China - where, last Wednesday, the government introduced price controls on dairy products, meat, vegetables and cereals. And while food price inflation hit 18 per cent last year in China, there's no good reason why they should not do that here. In fact, there are a lot of reasons why they should.

There have been four chief drivers of food price inflation in the last two years. The first is the huge rise in oil prices: $100 a barrel means food that is four-times as expensive to plant, irrigate, harvest and transport as it was six years ago. Some commodities brokers are now betting on oil going to $200 a barrel within a decade.

The second factor is the climate: drought, hurricanes and floods around the world last year made for terrible harvests - from Australia to the Caribbean and the United Kingdom. The third is the massive rise in the price of the staple-food commodities: wheat, maize and soya. This has been partly driven by speculation in the markets, partly by the demand for crops to turn into fuel.

Ethanol, a diesel-type fuel made from plants, must bear a lot of the blame. Since George Bush announced a rush to corn-based ethanol it's done well for American corn farmers - 20 per cent of whose harvest, subsidised by the government, went into fuel tanks rather than flour mills this year. Bush's taste for corn-based ethanol is based partly on trying to break the US's reliance on Middle East oil suppliers, and partly on a (largely misplaced) faith in its ecological credentials. (Its increasingly voluble critics claim that growing grain and then transforming it into ethanol requires more energy from fossil fuels than ethanol generates.)

And, as a result of the vast tracts of farmland now being given over to corn for ethanol production, the price has risen sharply. Hence the tortilla riots in Mexico, last summer, over the price rise in the corn flour that makes the pancakes. Some claim that there is now a war between the 850 million chronically hungry of the world and the 800 million motorists - all fighting for the same food crop. It's a pretty unbalanced battle: the maize to fill a tank for a 'Chelsea tractor' would feed a family of four for three months. In October the United Nations' spokesman on famine, Jean Ziegler, called the biofuel boom 'a crime against humanity'. And as the Economist magazine recently noted: 'The 30 million tonnes of extra corn going to ethanol this year amounts to half the fall in the world's overall grain stocks.'

Last week, after a mass protest at the price of soya beans in Indonesia (which rose because of the shortage of corn and other crops to supply the biofuel industry), Ashok Gulati, director at the International Food Policy Research Institute said: 'It's finally a trade-off between filling stomachs and filling diesel tanks in cars and trucks.'

But the last, and perhaps the most disturbing factor in the food price rise, is the financial boom in India and China. Around the world, and through history, people have eaten more meat as they have become richer. This is called the nutrition transition and it's now happening, very quickly, in the two most populous nations on the planet.

Hundreds of millions more people are now rich enough to eat meat compared with 10 years ago, with meat consumption in China more than doubling over the past 20 years. Meat also consumes food resources in a shockingly inefficient way: it takes 8kg of grain to produce 1kg of beef, and 4kg for pork. But each kilo of grain may need a tonne of water. And fuel oil is needed throughout the process, to fertilise the grain, pump water and to transport it.

Water and oil will both be in short supply this century. None of this is a surprise to Tim Lang, professor of food policy at London's City University, and an adviser to the government through the Sustainable Development Commission. 'I've been expecting this for two years', he says. 'The food system is entering a period of very significant restructuring, the first since the years after the Second World War. We may look back at the second half of the last century as an era of cheap food. It'll be like the Hundred Years' War, as we were taught it in school: a seminal moment in human history that's gone and will not return.'