The New Geopolitics of Food; Foreign Policy.

In the United States, when world wheat prices rise by 75 percent, as they have over the last year, it means the difference between a $2 loaf of bread and a loaf costing maybe $2.10.

If, however, you live in New Delhi, those skyrocketing costs really matter: A doubling in the world price of wheat actually means that the wheat you carry home from the market to hand-grind into flour for chapatis costs twice as much.

And the same is true with rice.

If the world price of rice doubles, so does the price of rice in your neighborhood market in Jakarta.

And so does the cost of the bowl of boiled rice on an Indonesian family's dinner table.

But for the planet's poorest 2 billion people, who spend 50 to 70 percent of their income on food, these soaring prices may mean going from two meals a day to one.

Those who are barely hanging on to the lower rungs of the global economic ladder risk losing their grip entirely.

This can contribute -- and it has -- to revolutions and upheaval.

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Grain consumption per person in the United States, for example, is four times that in India, where little grain is converted into animal protein.

For now.

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In 2010, the United States harvested nearly 400 million tons of grain, of which 126 million tons went to ethanol fuel distilleries (up from 16 million tons in 2000).

This massive capacity to convert grain into fuel means that the price of grain is now tied to the price of oil.

So if oil goes to $150 per barrel or more, the price of grain will follow it upward as it becomes ever more profitable to convert grain into oil substitutes.

And it's not just a US phenomenon: Brazil, which distills ethanol from sugar cane, ranks second in production after the United States, while the European Union's goal of getting 10 percent of its transport energy from renewables, mostly biofuels, by 2020 is also diverting land from food crops.

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Grain and soybean prices started to climb, tripling by mid-2008.

In response, many exporting countries tried to control the rise of domestic food prices by restricting exports.

Among them were Russia and Argentina, two leading wheat exporters.

Vietnam, the No. 2 rice exporter, banned exports entirely for several months in early 2008.

So did several other smaller exporters of grain.

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A 2010 World Bank analysis of these "land grabs" reported that a total of nearly 140 million acres were involved -- an area that exceeds the cropland devoted to corn and wheat combined in the United States.

Such acquisitions also typically involve water rights, meaning that land grabs potentially affect all downstream countries as well.

Any water extracted from the upper Nile River basin to irrigate crops in Ethiopia or Sudan, for instance, will now not reach Egypt, upending the delicate water politics of the Nile by adding new countries with which Egypt must negotiate.

The potential for conflict -- and not just over water -- is high.

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So how much will all this expand world food output?

We don't know, but the World Bank analysis indicates that only 37 percent of the projects will be devoted to food crops.

Most of the land bought up so far will be used to produce biofuels and other industrial crops.

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With China's 1.4 billion increasingly affluent consumers starting to compete with US consumers for the US grain harvest, cheap food, seen by many as an American birthright, may be coming to an end.

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Land grabbing, water grabbing, and buying grain directly from farmers in exporting countries are now integral parts of a global power struggle for food security.

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Consider, for example, what would have happened if the 2010 heat wave that was centered in Moscow had instead been centered in Chicago.

In round numbers, the 40 percent drop in Russia's hoped-for harvest of roughly 100 million tons cost the world 40 million tons of grain, but a 40 percent drop in the far larger US grain harvest of 400 million tons would have cost 160 million tons.

The world's carryover stocks of grain (the amount in the bin when the new harvest begins) would have dropped to just 52 days of consumption.

This level would have been not only the lowest on record, but also well below the 62-day carryover that set the stage for the 2007-2008 tripling of world grain prices.

http://www.foreignpolicy.com/articles/2011/04/25/the_new_geopolitics_of_food