SUBSCRIBE

Breaking News on Food & Beverage Development - EuropeUS edition | Asian edition

News > Market Trends

Read more breaking news

 

 
Comment

Why food is the new oil

11-Aug-2008
Last updated on 11-Aug-2008 at 17:45 GMT

“Food is a weapon – don’t waste it.” This message, which featured on a Second World War poster issued by the US Office of War Information in 1943, is a lesson from history we would do well to heed.

Its significance is highlighted by the Russian government’s recent announcement of plans to form a state grain trading company which will control up to half the country’s grain exports.

The prospect of Moscow using food as a diplomatic weapon is as chilling as it is easy to imagine. The Russian state is no stranger to exploiting access to a key commodity to exert political power.

For example, Russian state oil company Gazprom has proved more than willing to manipulate natural gas sales to achieve political objectives in neighbouring countries. Only this week, crude oil prices leapt by more than a dollar reflecting fears that the conflict between Russia and Georgia could disrupt supplies from the area.

State control of grain exports would also exert a truly global reach. Exporting 10.79m tones in 2006/2007, the Russian Federation is the world’s fifth biggest grain exporter, according to statistics from the United States Department of Agriculture.

However Russia enjoys relatively reliable harvests in contrast to the more weather dependent output of normally bigger exporters Argentina and Australia. For example, as the Australian drought intensifies, grain production has fallen from 25m tonnes to 9.8m tonnes in 2006 with a corresponding fall in the volume of exports.

So, Russia’s plans to transform the Agency for the Regulation of Food Markets into a state organization, potentially tasked with achieving political objectives not merely commercial ones, should concern everyone. We all have an interest – whether as consumers, major food retailers or processors worried about access to reasonably-priced raw materials and governments concerned about the strategic implications.

Moscow’s plans have drawn a swift and decisive response from Washington. US agriculture diplomats have branded the development “a giant step,” back to the Soviet era, according to the Financial Times.

Regardless of the Trans Atlantic rhetoric, an important point is at play: Food, just like energy, is becoming an increasingly precious commodity; the control of which confers political power. Of course, it has always delivered power. In the past, the US has withheld food aid from regimes of which it disapproves. But for the first time in a generation, western access to plentiful supplies of cheap food is no longer assured.

Not for the first time, we are learning the cost of complacency when it comes to supply of a key commodity. Just as the West is learning to reshape it’s relationship with the availability of energy – particularly-carbon based fuels – now is the time to rethink food policies. Let’s not repeat with food the mistakes we made with oil. Is there a better way?

Could we apply to the food sector what we have learnt from the management of oil? At the last G8 Summit, Russian President Dmitry Medvedev called for a Grain Summit in Moscow next year. If that takes place, we suggest the launch of OGEC – the Organisation of Grain Exporting Countries. Although far from flawless, the Organisation of Petroleum Exporting Countries has, for many years, introduced much needed stability into volatile markets.

A similar organisation dedicated to grain could help regulate world grain stocks at a time when they are touching their lowest level since 1979. As demand for land to produce biofuels increases and climate change impacts global harvests, OGEC could deliver a steadying hand.

It could also help both to re enforce and to institutionalise the truth that access to food is a basic human right – not a weapon of war.

Mike Stones is the managing editor of Decision News Media. He has more than 20 years’ experience of writing about food, farming and development topics. If you would like to comment on this article, please email Michael.stones”at”decisionnews.com.

Live Supplier Webinars

Rethinking Fat Forum
William Reed Business Media

On demand Supplier Webinars

Your future starts at Cargill's T for Trends
Cargill Cocoa & Chocolate
Food testing — let automation take the strain
Qiagen
ETENIA™: Recognize True Milk Value
AVEBE
The FoodNavigator Salt Reduction Forum
William Reed Business Media
All supplier webinars