“A great book which should wake up humankind!” –Klaus Schwab, World Economic Forum
Chapter 1. A Planet under Stress: Food: A National Security Issue
The ecological deficits just described are converging on the farm sector, making it more difficult to sustain rapid growth in world food output. No one knows when the growth in food production will fall behind that of demand, driving up prices, but it may be much closer than we think. The triggering events that will precipitate future food shortages are likely to be spreading water shortages interacting with crop-withering heat waves in key food-producing regions. The economic indicator most likely to signal serious trouble in the deteriorating relationship between the global economy and the earth's ecosystem is grain prices.
Food is fast becoming a national security issue as growth in the world harvest slows and as falling water tables and rising temperatures hint at future shortages. More than 100 countries import part of the wheat they consume. Some 40 import rice. While some countries are only marginally dependent on imports, others could not survive without them. Iran and Egypt, for example, rely on imports for 40 percent of their grain supply. For Algeria, Japan, South Korea, and Taiwan, among others, it is 70 percent or more. For Israel and Yemen, over 90 percent. Just six countries—the United States, Canada, France, Australia, Argentina, and Thailand—supply 90 percent of grain exports. The United States alone controls close to half of world grain exports, a larger share than Saudi Arabia does of oil.31
Thus far the countries that import heavily are small and middle-sized ones. But now China, the world's most populous country, is likely to soon turn to world markets in a major way. When the former Soviet Union unexpectedly turned to the world market in 1972 for roughly a tenth of its grain supply, following a weather-reduced harvest, world wheat prices climbed from $1.90 to $4.89 a bushel. Bread prices soon rose too.32
If China depletes its grain reserves and turns to the world grain market to cover its shortfall, now 40 million tons per year, it could destabilize world grain markets overnight. Turning to the world market means turning to the United States, presenting a potentially delicate geopolitical situation in which 1.3 billion Chinese consumers with a $100-billion trade surplus with the United States will be competing with American consumers for U.S. grain. If this leads to rising food prices in the United States, how will the government respond? In times past, it could have restricted exports, even imposing an export embargo, as it did with soybeans to Japan in 1974. But today the United States has a stake in a politically stable China. With an economy growing at 7-8 percent a year, China is the engine that is powering not only the Asian economy but, to some degree, the world economy.33
For China, becoming dependent on other countries for food would end its history of food self-sufficiency, leaving it vulnerable to world market uncertainties. For Americans, rising food prices would be the first indication that the world has changed fundamentally and that they are being directly affected by the growing grain deficit in China. If it seems likely that rising food prices are being driven in part by crop-withering temperature rises, pressure will mount for the United States to reduce oil and coal use.
For the world's poor—the millions living in cities on $1 per day or less and already spending 70 percent of their income on food—rising grain prices would be life-threatening. A doubling of world grain prices today could impoverish more people in a shorter period of time than any event in history. With desperate people holding their governments responsible, such a price rise could also destabilize governments of low-income, grain-importing countries.34
When I projected in 1995 in Who Will Feed China? that China would one day turn abroad for part of its grain, the U.S. National Intelligence Council, the umbrella over all the U.S. intelligence agencies, launched the most detailed assessment of China's food prospect ever undertaken. The council was concerned precisely because such a move by China could drive up world grain prices and destabilize governments in developing countries. An interdisciplinary team led by Michael McElroy, Chairman of Harvard's Department of Earth and Planetary Sciences, conducted this extraordinarily ambitious study. Relying on an interdisciplinary approach and a vast array of resources, including 35 years of CIA satellite data on land use and the Sandia National Laboratories to model the water supply-demand balance of every river basin in China, the team concluded in its "most likely" scenario that China would one day have to import massive quantities of grain.35
The team then decided that the world would not have any difficulty in supplying grain on such a vast scale. The shortcoming of this conclusion, in my opinion, was that it relied too heavily on extrapolating late twentieth-century grain production trends into the twenty-first century, failing to take into account emerging constraints on harvests, such as aquifer depletion and rising temperatures.
When grain prices began to climb in 1972-74, it did not take long for a politics of food scarcity to emerge. Pressure from within grain-exporting countries to restrict exports in order to check the rise in domestic food prices was common.36
More recently, the Canadian Wheat Board, which handles the nation's wheat exports, announced in early September 2002 that it had no more to sell. This abrupt withdrawal from the market—even before that year's drought-reduced harvest was complete—illustrates the kind of action that exporters can take when confronted with scarcity. Instead of letting the world market allocate scarce supplies of high-quality wheat, the Board decided that it would protect domestic supplies, then sell only to traditional clients, leaving other importers to fend for themselves. In late October, Australia—also experiencing a severe drought—announced that it would ration wheat and barley exports among its best customers, excluding all other potential buyers.37
Historically, the world had two food reserves: the global carryover stocks of grain and the cropland idled under the U.S. farm program to limit production. The latter could be brought into production within a year. Since the U.S. land set-aside program ended in 1996, however, the world has had only carryover stocks as a reserve.38
Food security has changed in other ways. Traditionally it was largely an agricultural matter. But now it is something that our entire society is responsible for. National population and energy policies may have a greater effect on food security than agricultural policies do. With most of the 3 billion people to be added to world population by 2050 being born in countries already facing water shortages, childbearing decisions may have a greater effect on food security than crop planting decisions. Achieving an acceptable balance between food and people today depends on family planners and farmers working together.39
Climate change is the wild card in the food security deck. It is perhaps a measure of the complexity of our time that decisions made in the Ministry of Energy may have a greater effect on future food security than those made in the Ministry of Agriculture. The effect of population and energy policies on food security differ in one important respect: population stability can be achieved by a country acting unilaterally. Climate stability cannot.
31. Grain trade from USDA, op. cit. note 8.
32. Ibid.; IMF, International Financial Statistics Yearbook 2001 (Washington, DC: August 2001), p. 184.
33. Annual shortfall from USDA, op. cit. note 8; U.S. soybean embargo on Japan from David Rapp, "Farmer and Uncle Sam: An Old, Odd Couple," Congressional Quarterly Weekly Report, 4 April 1987, pp. 598-603; Chinese trade surplus with the United States from U.S. Census Bureau, "U.S. Trade Balance with China," at www.census.gov/foreign-trade/balance/c5700.html, updated 13 May 2003; Chinese economic growth from IMF, World Economic Outlook (Washington, DC: September 2002), p. 36.
34. People living on $1 a day from World Bank, World Development Report 2000/2001 (New York: Oxford University Press, 2001), p. 3.
35. Lester R. Brown, Who Will Feed China? (New York: W.W. Norton & Company, 1995); Michael McElroy et al., China Agriculture: Cultivated Land Area, Grain Projections, and Implications (Washington, DC: National Intelligence Council, November 1997).
36. Lester R. Brown and Erik P. Eckholm, By Bread Alone (New York: Overseas Development Council, 1974), pp. 69-72.
37. "Wheat Board Pulls Out of Market," Canadian Press, 6 September 2002; "Drought Threat to Australian Summer Crops," Financial Times, 27 November 2002.
38. U.S. farm program from USDA, Agricultural Resources and Environmental Indicators 1996-97 (Washington, DC: July 1997), pp. 255-327; carryover stocks from USDA, op. cit. note 8.
39.Population estimates from United Nations, op. cit. note 3.
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