Last Tango In Tokyo  

Posted by Big Gav in , , , , ,

The Age reports that Japan is facing butter shortages, as rising agricultural commodity prices cause havoc - apparently even in rich countries.

Japan's acute butter shortage, which has confounded bakeries, restaurants and now families across the country, is the latest unforeseen result of the global agricultural commodities crisis. A sharp increase in the cost of imported cattle feed and a decline in milk imports, both of which are typically provided in large part by Australia, have prevented dairy farmers from keeping pace with demand.

While soaring food prices have triggered rioting among the starving millions of the third world, in wealthy Japan they have forced a pampered population to contemplate the shocking possibility of a long-term — perhaps permanent — reduction in the quality and quantity of its food.

A 130% rise in the global cost of wheat in the past year, caused partly by surging demand from China and India and a huge injection of speculative funds into wheat futures, has forced the Government to hit flour millers with three rounds of stiff mark-ups. The latest — a 30% increase this month — has given rise to speculation that Japan, which relies on imports for 90% of its annual wheat consumption, is no longer on the brink of a food crisis, but has fallen off the cliff.

According to one government poll, 80% of Japanese are frightened about what the future holds for their food supply. Last week, as the prices of wheat and barley continued their relentless climb, the Japanese Government discovered it had exhausted its ¥230 billion ($A2.37 billion) budget for the grains with two months remaining. It was forced to call on an emergency ¥55 billion reserve to ensure it could continue feeding the nation. "This was the first time the Government has had to take such drastic action since the war," said Akio Shibata, an expert on food imports, who warned the Agriculture Ministry two years ago that Japan would have to cut back drastically on its sophisticated diet if it did not become more self-sufficient.

In the wake of the decision this week by Kazakhstan, the world's fifth biggest wheat exporter, to join Russia, Ukraine and Argentina in stopping exports to satisfy domestic demand, the situation in Japan is expected to worsen. ...

"In the past, Japan was a rich country with a powerful yen that could easily buy cheap imports such as wheat, corn and soybeans," said Mr Shibata, who directs the Marubeni Research Institute in Tokyo. "But with enormous competition from the booming Chinese and Indian economies, that's changed forever. You also need to take into account recent developments, including the damage to crops caused by drought and other disasters in exporting countries like Australia," where the value of wheat exports has tumbled from $3.49 billion to $2.77 billion in the past three years.

The situation has been compounded by a surge in demand for bio-fuels such as ethanol, made from maize, encouraging farmers around the world to divert their efforts away from wheat and barley and into maize, further driving up prices.

The SMH is also following the food situation - "Dearer food unleashes 'silent tsunami'".
A "silent tsunami" unleashed by costlier food threatens 100 million people, the United Nations said on Tuesday, but views differed as to how to stop it. Aid bodies said there was enough food to go round but the key was to help the poor afford it, and urged producing nations not to curb exports to stockpile food at home.

In London, Prime Minister Gordon Brown said Britain would seek changes to EU biofuels targets if it was shown that planting crops for fuel was driving up food prices - a day after the bloc stood by its plans to boost biofuel use.

Riots in poor Asian and African countries have followed steep rises in food prices caused by many factors - dearer fuel, bad weather, rising disposable incomes boosting demand and the conversion of land to grow crops for biofuel. Rice from Thailand, the world's top exporter, has more than doubled in price this year.

Sheeran said artificially created shortages, such as those caused by countries that have slowed or stopped exports, were worsening the problem. Major food exporters including Indonesia, Kazakhstan, Egypt and Cambodia have closed their stocks to safeguard supplies. "The world has been consuming more than it has been producing for the past three years, so stocks have been drawn down," Sheeran said. "The world knows how to produce food and will do so. But we will have a couple of challenging years."

Meanwhile the government here is trying to keep food prices down by increasing competition in the supermarket sector (whether or not the arrival of Wal*Mart in Australia would be a good thing or not isn't discussed).
IN a move to drive down food prices, the Federal Government will make it easier for foreign supermarket chains such as Wal-Mart, Costco and Aldi to set up in Australia and challenge giants Coles and Woolworths. With inflation figures due today expected to show significant upward pressure on food prices, the Herald can reveal the Rudd Government will change investment rules to give foreign buyers of vacant commercial land more time to start developing it.

The price of rice hit another record today.
World rice prices have hit new record highs in Asian trade, following further concerns that export bans by top rice-producing countries are hitting supply. To compound the problem, the Australian harvest has finished with just 18,000 tonnes in the bin, well down from the 1.2-million-tonne crops of previous years.

Sunrice chief executive officer Gary Helou says this 80-year low in Australian production is having a big impact on the current world price. "In the medium grain market we have had an impact, a big impact," he said. "This medium-grain variety that's consumed up in Japan, in the Pacific, northern Asia, Middle East and Europe is only grown and exported out of Australia, California and Egypt, so the world market, expects it, needs it and relies on it.

The Times reports that US shops are rationing food for first time - though "food" should probably be replaced with "rice".
US RETAIL giant Wal-Mart is rationing rice sales to protect dwindling supplies as the global price skyrockets and producers such as Australia struggle to keep up with demand. The drastic move is the first time that food rationing has been introduced in the US.

Growing appetites in China and India, drought in Australia and pests in Vietnam have contributed to the rice shortage and soaring prices. Hoarding by Asian farmers and rice dealers has sparked clampdowns by authorities there who are worried about getting subsidised rice to the poor.

While Americans suffered some rationing during World War II for items such as petrol, light bulbs and stockings, they have never had to limit consumption of a key food item. In Britain, where Wal-Mart owns Asda supermarkets, rice is being rationed by shopkeepers in Asian neighbourhoods to prevent hoarding. Tilda, the biggest importer of basmati rice, said that its buyers — who sell to the curry and Chinese restaurant trade as well as to families — were restricting customers to two bags per person. “It is happening in the cash-and-carries,” said Jonathan Calland, a company executive. “I heard from our sales force that one lady went into a cash-and-carry and tried to buy eight 20kg bags.”

Wal-Mart said that Sam’s Club, its wholesale business, which sells food to restaurants and other retailers, had limited each customer to four bags of long-grain white rice per visit. In the past three months wholesalers have experienced a sharp rise in demand for food items such as wheat, rice and milk as businesses stocked up to protect themselves against rising prices. ...

Food prices across the world have rocketed in the past two years, driven by increased demand for corn — the grain that is fermented to produce ethanol, the biofuel. With corn a main foodstock in dairy farming, milk has doubled in price in two years.

The Wall Street Journal says Maybe It’s Time for Americans to Start Stockpiling Food. And people say peak oilers are alarmists. I might note that hoarding is the worst thing people can do, as the domino effect it has on the system just breeds panic, rising prices and more hoarding - a vicious circle we really don't need.
I don’t want to alarm anybody, but maybe it’s time for Americans to start stockpiling food.

No, this is not a drill.

You’ve seen the TV footage of food riots in parts of the developing world. Yes, they’re a long way away from the U.S. But most foodstuffs operate in a global market. When the cost of wheat soars in Asia, it will do the same here.

The Washington Times (an unreliable source, but nevertheless) says Americans Are Hoarding Food as Industry Seeks Regulations - and points the finger at commodity speculators.
Farmers and food executives appealed fruitlessly to federal officials yesterday for regulatory steps to limit speculative buying that is helping to drive food prices higher. Meanwhile, some Americans are stocking up on staples such as rice, flour and oil in anticipation of high prices and shortages spreading from overseas. Their pleas did not find a sympathetic audience at the Commodity Futures Trading Commission (CFTC), where regulators said high prices are mostly the result of soaring world demand for grains combined with high fuel prices and drought-induced shortages in many countries.

The regulatory clash came amid evidence that a rash of headlines in recent weeks about food riots around the world has prompted some in the United States to stock up on staples. Costco and other grocery stores in California reported a run on rice, which has forced them to set limits on how many sacks of rice each customer can buy. Filipinos in Canada are scooping up all the rice they can find and shipping it to relatives in the Philippines, which is suffering a severe shortage that is leaving many people hungry.

While farmers here and abroad generally are benefiting from the high prices, even they have been burned by a tidal wave of investors and speculators pouring into the futures markets for corn, wheat, rice and other commodities and who are driving up prices in a way that makes it difficult for farmers to run their businesses. “Something is wrong,” said National Farmers Union President Tom Buis, adding that the CFTC’s refusal to rein in speculators will force farmers and consumers to take their case to Congress.

Bloomberg reports that World Vision is cutting back on food relief as it cannot afford soaring food costs.
World Vision International, which provides food relief in 35 countries, said it can no longer provide rations to 1.5 million of the poor people it fed last year because of soaring costs and unmet aid commitments by donors.

``Despite our best efforts, more than a million of our beneficiaries are no longer receiving food aid,'' World Vision President Dean Hirsch said in a statement yesterday. ``Around 572,000 of these are children who urgently need enough healthy food to thrive.''

Popular Mechanics has an article on producing "green gasoline" from cellulose. I'm starting to think that even next generation biofuels that meet Vinod Khosla's CLAW criteria are basically a waste of time - as population increases, any competition between fuel and food (either directly - converting food to fuel or growing fuel crops instead of food crops - or indirectly by slowly impacting soil quality) is going to be a bad thing. We're better off just migrating away from our legacy transportation fuel infrastructure and moving to pure electric transport - so we should focus on this goal primarily.
Researchers at UMass Amherst recently published a new method of refining hydrocarbons from cellulose, paving the way to turn wood scraps into gasoline, diesel fuel, Tupperware—anything, essentially, that’s normally refined from petroleum. Many scientists have been working on ways to turn everything from corn stalks to tires into ethanol, sidestepping some of the problems inherent to making fuel from corn and other food products. But ethanol has a number of liabilities, regardless of the source. For instance, it requires automotive engines to be modified and contains less energy than gasoline, driving down fuel economy.

Turning cellulose into gasoline is tricky. Unlike raw crude, which is made up mostly of hydrocarbons to begin with, plant material contains a great deal of oxygen woven into its molecular structure. “Crude oil looks more similar to gasoline than biomass does,” says George Huber, lead author of the new study. “So the challenge is how do you efficiently remove the oxygen and make these compounds that look like gasoline or diesel fuel? And how do you do it in the fewest number of steps and in the most economical way?”

Using a catalyst commonly employed in the petroleum industry, Huber and his colleagues heated small amounts of cellulose very quickly for a matter of seconds before cooling it, producing a high-octane liquid similar to gasoline. “The temperature window is very critical,” Huber says. If you heat too slowly, you produce mainly coke—elemental carbon residue. If you heat too fast, you make mainly vapors. The sweet spot, about 1000 degrees per second, transfers roughly half the cellulose’s energy into hydrocarbons. “If we can get 100 percent yield, we estimate the cost to be about a dollar per gallon,” Huber says. “Right now we’re at 50 percent. Can we get 100 percent? I don’t know. Hopefully we’ll bump those numbers up.”

Huber and his colleagues aren’t the first to derive hydrocarbons from renewable sources. Virent Energy Systems, for example, just signed a deal with Shell to produce gasoline from plant sugars and expects to open a pilot facility in the next two years. UOP is working on a project to produce jet fuel for U.S. and NATO fighters from algal and vegetable oils. But Huber’s work stands out as likely the first direct conversion from cellulose, opening up as potential fuel sources virtually anything that grows. Commercialization of the technology may take another five to 10 years, the researchers predict.

Developments in so-called “green hydrocarbons” arrive as ethanol continues to come under attack as expensive, inefficient and a contributor to rising food prices around the world. (More than a billion bushels of corn are diverted to ethanol production each year.) “There’s certainly a lot of historical inertia for ethanol. It’s gotten us off to a great start, but I can’t see the country transitioning to flex-fuel,” says John Regalbuto, director of the Catalysis and Biocatalysis Program at the National Science Foundation. “I almost think, long term, that we will go to plug-in hybrids. But we’re still going to need diesel and jet fuel—you can’t run trains or fly planes with ethanol or hydrogen.”

9 comments

"the price of rice" link is just to your blog.

Lots of doomerism around, I'm impressed.

I didn't know the Japanese government did the grain buying for their people, that's very socialistic of them.

Thanks - link fixed.

There is lots of doomy news around - and the food prices story is still fresh enough to get my attention.

Plus the weather has me in a darker frame of mind than usual.

I was surprised about the Japanese food buying scheme too - doesn't make a lot of sense - surely there must be private importers of butter ?

Maybe there's some Japanese equivalent of the AWB, and they handle imports as well as exports of stuff. It'd make sense, they have strong protection for domestic food producers. And for true protectionism you need not just tariffs but a government-appointed monopoly :)

Anonymous   says 6:38 PM

Rice production is very symbolic in Japan... and that symbolism is helped by the votes that the farming lobby typically delivers to the LDP. A gerrymandered system of truly Joh proportions.

On another train of thought, Japan is a bit of a socialist country... but of which persuasion is unclear. After all, the trains DO run ON TIME.

And Gav, congratulations on one of the most interestingly tangential title to text references I've seen.

SP

Kiashu - they do have a history of politicised agriculture - though I didn't realise it extended to butter (as SP notes, rice production is intensely protected and sensitive).

SP - they do have a history of that sort of thing - can't say it seemed to be problematical in Tokyo, but I have read stories from the Osaka area where the local nationalists seem a bit out of control.

If you got my allusion in the title then well done - its a little risque / tasteless, but I figure hardly anyone will know what I'm going on about (as per usual) :-)

Anonymous   says 2:30 AM

There's a run on white rice here in the States (Nevada) as I type this. Some of the larger "warehouse" type shops have instituted a purchase limit of 50 kilos per person. That situation is a bit absurd if you think about it. I doubt if most Americans eat fifty kilos of rice in thirty years. Or even a lifetime. Meanwhile in the health food shop down the street the owner was telling me she has fifty kilos of brown rice available in her stockroom but has not noticed any increase in purchases. So I bought all fifty (just kidding, I bought a kilo because I like it and eat it regularly anyway).

The rush to stock up on white rice in the USA is the result of another sensationalist Establishment media-driven story. I suspect more than a few of the "economic experts" that appear on television here are consulting with market grain speculators and they may have a financial interest in promoting the idea of a rice shortage in the USA.

Speaking of grain, and ethanol etc. I'm not sure what the percentages are in Australia, but just for reference, these are some figures for the USA:

Total U.S. Corn (Maize) Production:

~10% used for direct human consumption

~90% used for livestock feed

Of the total U.S. corn (maize) crop, 10% is fed directly to humans (variety: sweet corn). 90% is fed to livestock (variety: field corn). Cattle, pigs and chickens consume the overwhelming majority of the total corn (maize) crop in the USA. If anyone is going hungry due to lack of corn in his or her diet that problem is easily solved -- there is plenty of field corn available. It's being fed to livestock. Field corn is not as tasty and palatable as sweet corn is but it’s perfectly edible. Ethanol is made from field corn, i.e. animal feed.

Ref:

http://www.physorg.com/news94224070.html

http://www.nj.com/opinion/times/editorials/index.ssf?/base/news-0/120737075044810.xml&coll=5

CV and Contact Page for Dr Dale:

http://www.chems.msu.edu/php/faculty.php?user=bdale

* * * * * * * * * * * * * *

All that being said, making ethanol from corn (maize) kernels or any other food grain is antique technology of course. That process will be gradually phased out as:

1.) More cellulosic ethanol (CE) production facilities are built

and

2.) Marginal and poor soil areas are identified for use as biomass-only plantations. Those plantations would be sown with non-edible native species that will grow and produce significant biomass in ground that's not suitable for food production. Switchgrass (Panicum virgatum) and Trumpet Creeper (Campsis radicans) are two examples of species that will grow in poor soil and cold climate in the midwest USA. There are several other species more suited to specific conditions in other areas of the country. Honey mesquite (Prosopis glandulosa) and various Sagebrush (genus Salvia) that coppice well and thrive in the arid soil and extremely hot climate of the desert southwest and west are a couple other examples.

In Australia, native species such as Wattles (genus Arcacias), Eucalyptus (genus Eucalyptus), Desert Oak (Allocasuarina decaisneana), Saltbush (genus Atriplex), Spinifex (genus Plectrachne and genus Triodia), Mitchell Grass (genus Astrebla), Callistemons (genus Callistemon), and others etc. do grow in arid and poor soil regions of the country and are suitable for CE production. Many of these species will thrive with relatively little human attention, irrigation or fertiliser, and in areas that will not support food agriculture.

.

Thanks for the thoughtful comments Mark.

I agree that the shortage fears are being a bit overblown at this point - but that doesn't help people who are genuinely being priced out of the rice market at the moment - even if it is partly due to speculators and partly due to governments making unwise decisions to hoard at a national level.

I understand and agree about the second+ generation biofuels options (which is why I mentioned Vinod Khosla and his CLAW requirements for them) - but none of these are in production yet - cellulosic ethanol has been slow coming.

As time passes we are still going to have to face the fact that :

1. Population is going to rise to 9+ billion people

2. The developing world is getting richer and adopting Western diets (so all that maize going to feed livestock is going to be more in demand as more people want to eat that livestock)

3. Climate change is causing traditional agricultural areas to have larger swings in production (as the effect of Australia's drought on global rice exports has demonstrated)

4. If people are going to buy biofuels, and the price of oil is higher than the price of the grain to produce these biofuels, then people will turn food into fuel - thats how a free market works. But that is going to make a lot of poor people very unhappy - and large scale unrest will be the result unless something is done to prevent this.

Anonymous   says 12:18 AM

Thank You, my pleasure of course.

==> Diets are changing radically in nations such as China, India, Brazil and Russia, where economic growth has boosted meat consumption. In China, it is up by 150 per cent since 1980. In India, it has risen by 40 per cent in the past 15 years. The demand for meat from across all developing countries has doubled since 1980.

==> Because cattle and chickens are fed on corn — it takes 8kg of grain to produce 1kg of beef — the price has risen.

Reference Here.

* * * * * * * *

You'd agree with me then that grain and other human-palatable vegetation should not be used to feed livestock, and land capable of supporting human food products should not be used to grow livestock feed.

Humans can survive on a minimal amount of animal protein (meat, milk, cheese, butter). I'd guess 25% of the animal protein produced today would be sufficient. I haven't any figures, that's just a guess. I'd welcome the actual figures if anyone has them. But you get the idea -- if 8 units of grain are required to produce 1 unit of beef, for instance, it's more ethical to simply provide people with those 8 units of grain directly rather than feed those 8 units of grain to cattle in order to produce 1 unit of beef. Livestock ranching could continue of course, but livestock would only be permitted to graze upon land that will not support human-food agriculture. The amount of land that will not support human-food agriculture but at the same time will support livestock grazing would dictate the number of livestock raised in a country.

Hi Mark,

I agree - its logical that we could stop eating meat and thus have far more grain available for human consumption.

Unfortunately that would require a dramatic reversal of the current trend - one that I don't see happening any time soon (and have difficulty imagining at all).

I can't see most people willingly giving up eating meat (some will of course, and some already have) and I can't see governments forcing them to either.

Rising meat prices will help limit demand, but in the meantime I think biofuels are just adding to an already difficult problem.

Feel free to suggest ways of overcoming my negativity though - if you can propose a practical way of limiting meat consumption I'm all ears (PETA's recent prize offering for artificially produced meat is one possible technique I guess - though I always found science fiction tales of 'meat beasts" growing in the cellar pretty horrible)...

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