Rising Grain Proces May Disrupt Global Economic Progress

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6:00 PM EST
Saturday, August 16, 1997

Rising grain prices may be the first global economic indicator to tell us that we are on an economic and demographic path that is environmentally unsustainable, reports a new Worldwatch Institute policy paper The Agricultural Link: How Environmental Deterioration Could Disrupt Economic Progress.

"The deterioration of the earth's ecosystem is slowing growth in world food production during the nineties and ushering in an era of scarcity," says Worldwatch Institute president, Lester R. Brown, author of the report. "After a half century of falling grain prices, the 39 percent rise in the world price of wheat over the last three years may signal a new era of rising grain prices."

For the world's affluent, who spend a small share of their income for food, even a doubling of world grain prices would not have a major immediate effect. But for the 1.3 billion in the world who live on a dollar a day or less, such a rise could be life-threatening. Heads of households unable to buy enough food for their families would hold their governments responsible and would likely take to the streets.

The resulting political instability in Third World cities could affect the earnings of multinational corporations, the performance of stock markets, the earnings of pension funds, and the stability of the international monetary system. In short, it could disrupt economic progress.

During the nineties, food security has deteriorated. Even though all the U.S. cropland idled under commodity programs has been returned to production, world grain carryover stocks have dropped to the lowest level on record. If the world is unable to rebuild depleted stocks, the next poor harvest could bring a dramatic rise in grain prices, one that could impoverish more people than any event in history.

While scientists have known for some time that the global economy could not continue to expand indefinitely if the ecosystem on which it depends continued to deteriorate, it was not clear how these conflicting trends would be reconciled. It now seems likely that agriculture will be the link that brings divergent economic and environmental trends together.

All the global trends of environmental degradation affect the food prospect, including deforestation, the buildup in greenhouse gases, soil erosion, aquifer depletion, overfishing, air pollution, and the loss of plant and animal species.

Deforestation leads to increased rainfall runoff, reduced aquifer recharge, and increased soil erosion. Rising atmospheric levels of CO2 may be responsible for the crop-withering heat waves that have reduced the U.S. grain harvest in three of the last nine years. Soil erosion is reducing the inherent fertility of perhaps 30 percent of the world's cropland. Aquifer depletion is reducing the irrigated area in many countries. With oceanic fisheries now being pushed to their limits, all future growth in food output will have to come from land-based sources.

Water scarcity, a matter of growing concern for many governments, is often considered separately from food scarcity, but 70 percent of all the water pumped from under ground or diverted from rivers is used for irrigation. Thus, if we face a future of water scarcity, we also face a future of food scarcity.

As the world demand for water has tripled since mid century, it has led to widespread, often massive, overpumping. Water tables are falling in major food-producing regions, including the southern Great Plains of the United States, the Punjab, which is the breadbasket of India, and in central and northern China.

The inevitable cutbacks in water pumping and irrigation that follow aquifer depletion are now starting. The shrinkage in irrigated area that is already underway in such places as the leading U.S. agricultural states of California and Texas, in the Chinese province of Shandong, and in Saudi Arabia makes expanding world food production more difficult.

As countries press against the limits of their water supplies, cities typically satisfy their growing needs by taking water from agriculture. This, in turn, frequently translates into higher grain imports. Water scarcity is now shaping international grain trade patterns, much as land scarcity has historically. To import a ton of wheat is to import a thousand tons of water. The water required to produce the grain now imported annually into the Middle East and North Africa equals the flow of the Nile.

In addition, at a time when water is becoming scarce and there is little new land to plow, the world's farmers are faced with a shrinking backlog of unused agricultural technology. For some farmers in agriculturally advanced countries, such as wheat growers in the United States and rice growers in Japan, where yields have been flat for more than a decade, scientists have few new technologies to offer that will further raise yields. While there are still many opportunities for raising land productivity in most countries, the worldwide rise has slowed abruptly during the nineties.

Meanwhile, as the growth in the grain harvest is slowing, growth in the demand for grain is at near-record levels. In addition to the 80 million people added each year, the rise in affluence, which is particularly dramatic in Asia, is contributing to unusually strong growth in the demand for grain.

Making sure that the next generation has enough food is no longer merely an agricultural matter. Historically, food security was the responsibility of the Ministry of Agriculture. Food scarcity could be alleviated simply by fine-tuning farm policies and investing more in agriculture. Now, however, achieving an acceptable balance between food and people depends as much on family planners as on farmers. Decisions made in the ministries of energy that will affect future climate stability may have as much effect on the food security of the next generation as those made in agricultural ministries.

Securing future food supplies depends on stabilizing climate, stabilizing population, raising the efficiency of water use, protecting cropland from conversion to nonfarm uses, reducing air pollution, stabilizing aquifers, stabilizing soils, and protecting the earth's biological diversity. These are also the steps needed to put the world on an economic and demographic path that is environmentally sustainable.

Although this listing of needed steps is a short one, the scale of the total effort needed is unprecedented. Stabilizing population means revolutionizing human reproductive behavior. Stabilizing climate means restructuring the global energy economy. Historically, the only effort that approaches the scale and urgency of the one outlined here is the mobilization during World War II. The purpose of this monograph is to convince national political leaders that such an effort is needed.