Grain Glut Gone as Global Supply Shrinks

TIME was when hard rains in the United States and droughts in Russia and Australia would have been seen as disconnected events. But in an era of a global economy, the effects of these far-flung weather patterns have combined to push world stocks of grain to their lowest in recent decades.

Bad weather is just one reason grain harvests have fallen over the past three years, forcing prices to their highest level in two decades. As they weigh the prospect of feeding an exploding global population, agricultural experts are attempting to assess whether the trend is temporary or the harbinger of a long-term food crisis.

Optimists say higher prices will prompt government reforms and expanded market incentives that will lead to increased production and an eventual return to a 20-year trend of lower prices. Pessimists say the world is on the cusp of an era of agricultural scarcity.

"Food scarcity will be the defining issue in the future in much the same way that ideological conflict was the defining issue in the cold-war era," says Lester Brown, president of The Worldwatch Institute, a Washington environmental group.

"I think this is going to be a short-term price hike because both farmers and governments are responding to higher prices by increasing supplies," rejoins Per Pinstrup-Andersen, director-general of the International Food Policy Research Institute (IFPRI) in Washington. "Food prices are still on a long-term downward trend."

The European Union already has reduced the amount of farmland being held out of production, Mr. Pinstrup-Andersen points out, even as farmers from North America and Australia have begun planting more wheat to cash in on higher global grain prices.

Environmental challenges

The problem of growing enough food will be exacerbated by environmental trends, including soil erosion, water shortages, and an apparent global-warming trend attributed by many experts to the "greenhouse" effect. The 10 warmest years on record have been since 1980. The two warmest years have been since 1990.

Keeping up with the global demand for food will also be harder because virtually all the world's major fishing grounds have been overfished. "For the first time, the world's farmers can no longer count on the world's fishermen to help them expand the world's food supply," Mr. Brown says. Keeping up could also be complicated by the fact that the world may be nearing the end of an era of "horizontal" expansion of agriculture, as University of Minnesota agricultural economist Vernon Ruttan explains.

"We are approaching the end of one of the most remarkable transitions in the history of agriculture," Mr. Ruttan says. "Prior to the beginning of this century, almost all increases in agricultural production occurred as a result of increases in the area cultivated. By the end of the century, there will be no significant areas where agricultural production can be expanded simply by adding more land to production."

Wheat prices in 1995 were 26 percent higher than in 1993, according to IFPRI. Stocks of all grains, including wheat, rice, and corn (maize), have fallen to their lowest level in the three decades since accurate records have been kept, according to IFPRI.

If food prices continue to rise, both sides agree, the hardest hit will be the world's poorest billion people, who subsist on less than a dollar a day and for whom continuing price increases could have catastrophic consequences.

Behind food shortages and higher prices lies the risk of political instability in poor nations. When prices go up, governments are held accountable. The result could be urban food riots like those that have challenged civil order in countries ranging from Egypt to Zambia.

Paradoxically, the phenomenon of higher grain prices has resulted from the trend of declining prices that began in the late 1970s and has discouraged farmers from growing more wheat.

The principal new upward pressure on grain prices has come from China, which last year switched from being a net exporter to a net importer of grain.

Recent grain shortages are not merely a result of China's fast-growing population, which numbers 1.2 billion. The main "problem" in China is greater affluence. Its economy has grown by more than half in four years. Much of the additional income is used to pay for a more diversified diet, including eggs, pork, poultry, beef, and beer - all of which are grain-intensive.

"We're looking at an unprecedented movement up the food chain by that half of the world's population living in Asia," Brown says. "At the same time, industrialization, which is moving at a breakneck pace, is chewing up cropland like crazy."

Adds agricultural economist Robert Wisner at Iowa State University in Ames: "The extreme recent upsurge in grain prices is probably temporary, but we may be moving up to a higher plateau of grain prices. The key element in the world picture is the People's Republic of China."

China may be able to grow more

Pinstrup-Andersen agrees that China will remain an importer of grain, but says the Asian giant's future food needs will not necessarily overtax world grain supplies. The reason: China has considerable underutilized capacity to grow food.

Recent satellite photos have shown that China may have as much as one-third more agricultural land than previously estimated, according to IFPRI. To minimize its reliance on the international market, meanwhile, the Chinese government has begun increasing its investment in domestic agriculture.

Mr. Wisner adds that peak Chinese production levels are well below levels reached by American farmers, meaning that the latitude for increased production is considerable. "That suggests there is room for substantial improvements in yields in production in China," says Wisner, who adds that within a decade Russia and other former Soviet states could again become net exporters of grain.

Keeping up with world demand

Agricultural experts say that hopes of keeping food production ahead of population and affluence-driven increases in demand depend on three things:

Increased investments in agricultural research.

Incentive-based economic policies.

Population policies designed to lower global birth rates.

Keeping ahead of the curve will also depend on developing new agricultural technologies. No one expects the kind of dramatic breakthroughs that occurred during the 1960s and '70s, when the "green revolution" sent grain production soaring worldwide. But a combination of new drought-, cold-, salt-, and pest-resistant crop strains, better crop- and water-management techniques, and biotechnology holds promise of expanding food supplies fast enough to keep up with world demand.

One recent example: The development of new varieties of corn that have internal resistance to crop borers significantly cuts losses in production from insect damage.

The Associated Press reported last week that Russia's grain harvest this year could be reduced by 20 million tons because of an acute shortage of pesticides. Pests, which take a toll on 70 percent of Russia's grain-producing cropland, are one reason last year's grain harvest in Russia was the lowest in 30 years. With more money for pesticides and more advanced pest-control methods, Russia could eventually reclaim its place among the world's grain-exporting nations.

"The proliferation of new, more versatile plant varieties, cropping systems, pest-control methods, and land-management practices has greatly enhanced the world's productive potential for the future," writes former Oklahoma State University president John Campbell, an agricultural specialist.

Paradoxically, the other key to global food security lies at the opposite end of the technology scale.

Small-scale farmers in developing nations have the potential to make a significant contribution to agricultural productivity. But pricing and exchange-rate policies enacted in dozens of countries have had the effect of depressing farm production by removing incentives for small farmers to grow.

In addition to creating such incentives, economists say, national governments need to provide the irrigation systems, rural credit, and secure land tenure that would make it possible for small farmers to increase production. Governments also need to build roads and provide marketing advice to enable farmers to get their produce to market.

Developing nations also need to do more to assist women, who may be the key to food security in many poor nations. Women are highly productive but because of laws and policies that discriminate against them, few have access to the credit, training, or tools that would enable them to increase their output.

One World Bank study on Kenya indicates that, given the same resources available to men, women would produce 10 to 15 percent more food than men and give more of it to their families.

"The failure of past development strategies is that they have been based on trickle-down, social safety-net approaches that identify the poor as a burden on the growth process," says Idriss Jazairy, former president of the International Fund for Agricultural Development (IFAD), a small UN agency that deals with rural poverty.

"We need to see that development is something that happens because of the poor, not in spite of the poor," Mr. Jazairy adds.

Most experts agree on one other thing: Even if aggregate food supplies do increase faster than global population, the plight of many developing nations, where food shortages are already acute, may not ease.

The prospects are especially dire in Africa, where population is projected to double by 2040 and where little capital is available either to invest in domestic agriculture or to purchase surpluses on the world market.

Africa's troubles could worsen as American funding of agricultural research, along with direct and indirect US assistance to Africa, continues to decline in an era of budget cutting.

"If you look 25 to 30 years into the future, there is reason for some concern because the private sector is less able to finance long-term basic research than the federal government," says Wisner, who notes that 10 to 15 years is often required to get new crop varieties from the laboratory to the consumer shelf. "Companies need a more rapid payoff."

Meanwhile, most of the money now available for high-tech research is spent for products for American supermarkets, like "designer" tomatoes, rather than for drought-resistant strains of wheat and maize (corn) for Africa.

"The reason we can't be too optimistic is that modern science is not being applied to developing-country problems," says IFPRI director-general Pinstrup-Andersen. "The poorest countries are likely to be left behind."

Between 'can' and 'likely'

All of which speaks to the point that the world's food future depends not just on what can be done to keep food production apace with population growth but what is likely to be done. Somewhere between the "can" and the "likely," the food future of Africa and other developing regions will be determined.

In Africa, where governments have been slow to provide market incentives for farmers, where countries have been disrupted by civil unrest (some 200 coups and coup attempts since 1960), and where displaced populations continue to swell (60 million during the 1980s alone), what is likely to be done - for the immediate future, at least - should not be overestimated, experts caution.

Under the circumstances, avoiding widespread hunger in Africa seems a 50-50 proposition at best.

Whatever the long term may hold, the short term could also prove problematical if bad weather continues in the world's top grain-producing regions.