"World on Edge details the vice closing around us: a quadruple squeeze of global warming and shortages in food, water and energy. Then it explains the path out—and how little time we have left to take that path. Got anything more important to read than that?" —Peter Goldmark, former head of the Port authority of New York and New Jersey, President of the Rockefeller Foundation, and CEO of the International Herald Tribune
Chapter 1. Entering a New World: The Emerging Politics of Scarcity
The first big test of the international community’s capacity to manage scarcity may come with oil or it could come with grain. If the latter is the case, this could occur when China—whose grain harvest fell by 34 million tons, or 9 percent, between 1998 and 2005—turns to the world market for massive imports of 30 million, 50 million, or possibly even 100 million tons of grain per year. Demand on this scale could quickly overwhelm world grain markets. When this happens, China will have to look to the United States, which controls the world’s grain exports of over 40 percent of some 200 million tons. 32
This will pose a fascinating geopolitical situation. More than 1.3 billion Chinese consumers, who had an estimated $160-billion trade surplus with the United States in 2004—enough to buy the entire U.S. grain harvest twice—will be competing with Americans for U.S. grain, driving up U.S. food prices. In such a situation 30 years ago, the United States simply restricted exports. But China is now banker to the United States, underwriting much of the massive U.S. fiscal deficit with monthly purchases of U.S. Treasury bonds. 33
Within the next few years, the United States may be loading one or two ships a day with grain for China. This long line of ships stretching across the Pacific, like an umbilical cord providing nourishment, will intimately link the two economies. Managing this flow of grain so as to simultaneously satisfy the food needs of consumers in both countries, at a time when ethanol fuel distilleries are taking a growing share of the U.S. grain harvest, may become one of the leading foreign policy challenges of this new century.
The way the world accommodates the vast projected needs of China, India, and other developing countries for grain, oil, and other resources will help determine how the world addresses the stresses associated with outgrowing the earth. How low-income, importing countries fare in this competition for grain will also tell us something about future political stability. And, finally, the U.S. response to China’s growing demands for grain even as they drive up food prices for U.S. consumers will tell us much about the capacity of countries to manage the emerging politics of scarcity.
The most imminent risk is that China’s entry into the world market, combined with the growing diversion of farm commodities to biofuels, will drive grain prices so high that many low-income developing countries will not be able to import enough grain. This in turn could lead to escalating food prices and political instability on a scale that will disrupt global economic progress.
Earlier civilizations that moved onto an economic path that was environmentally unsustainable did so largely in isolation. But in today’s increasingly integrated, interdependent world economy, if we are facing civilizational decline, we are facing it together. The fates of all peoples are intertwined. This interdependence can be managed to our mutual benefit only if we recognize that the term “in the national interest” is in many ways obsolete.
32. USDA, op. cit. note 12.
33. United Nations, op. cit. note 6; U.S. Census Bureau, Foreign Trade Statistics, “Trade: Imports, Exports and Trade Balance with China,” at www.census.gov/foreign-trade/balance/c5700.html, updated June 2005; Peter Goodman, “China Tells Congress to Back Off Business,” Washington Post, 5 July 2005.
Copyright © 2006 Earth Policy Institute