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21st Century Conundrum

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Rice Paddy Philippines

A palpable fear of shortages in the world's food supply is fast becoming a signaler for disruption and upheaval. How did it come to this?

Spread across several hundred hectares below Mount Makiling, the International Rice Research Institutes's headquarters looks like an enviable place to work in. Except for the clusters of low buildings and green houses, verdant paddies bearing different rice breeds occupy much of the available real estate. The air is fresh, the view picturesque, and walking along its well manicured lawns is pleasant exercise. Even with more than a thousand staff and workers, few are in sight and there's none of the bustle associated with stiff corporate offices.

A Few Problems
It was in the N.C. Brady Laboratory where a female public relations officer brought this writer to consult with an expert on the complicated economics of food production—pertaining to rice, of course. An economist by training and researcher by profession, Piedad Moya's hour long interview touched on some of the worrying trends that would likely become hot button issues in the coming years.

As she explains, conditions in the Philippines aren't dire but leave a lot to be desired. Citing a historic food crisis that's still fresh in the nation's collective memory, she insists the 2008 rice panic wasn't a supply problem. “It was a price crisis,” she says. “Supply was enough but people panicked. We decided to buy so much, but India blocked their exports. But the price of rice went down after.” Moya isn't the only other specialist who shares this view. Agricultural economist Rolando Dy often commented that what transpired in 2008 was fundamentally exacerbated by income as most Filipinos could not afford to go marketing for their rice.

A lecture on the national rice situation ensued where Moya the country's unique production shortcomings. Apparently, despite being part of a region that cultivates half of the world's supply the entire length and breadth of the Philippine archipelago only manages to grow rice on 4.4 million hectares (4.6 million according to other sources) and the actual land available is half the total. It's a modest figure compared to Vietnam and Thailand, but the difference owes more to geographical exceptionalism than the paltry state of agricultural practice.

“If ever our yield is not comparable, it's because we have less land and we have frequent typhoons,” she explains. “We don't have as much irrigation infrastructure. We have no long river deltas like Vietnam. We have no big dams like the Three Gorges or the Hoover. Our dams are insufficient. We don't exactly have water scarcity. But we have economic scarcity of water. There is plenty of water in the wet season but we cannot store it.”

Despite the litany of woes the surprising truth is such drawbacks on agriculture aren't grave threats to food security, which is an illusive holy grail for successive administrations. Moya doesn't hesitate to couch the often confusing definition of food security in comprehensible terms, adding how local politicians are afflicted with a general misconception regarding the matter. “Food security doesn't just mean you can produce all that you need to consume. It could also mean you can buy or have the capacity to buy the food you need, and then you could be food secure.”

She also takes the oft-proclaimed goal of total food security to its logical conclusion; even when production is consistent and grows, it isn't in step with the country's runaway population growth. As she puts it, “Of course, we can increase production. In fact, that's our job here at IRRI. You can be increasing, increasing, increasing production but if consumption isn't mitigated, if it's continuously increasing as well and both trends don't meet, then you have a shortage.” Thus, Piedad Moya arrives at the centuries old Malthusian dilemma.

Foundations
The Malthusian dilemma has a colorful lineage. It was originally conceived by Thomas Malthus, lifelong curate of the Anglican Church and resident academic for the British East India Company's Haileybury college. At the age of 32 his anonymously published 50,000 word An Essay On the Principle of Population set him on the path to intellectual greatness. Though widely criticized, it subsequently grew into a multi-volume masterpiece often mentioned in the same breath as Adam Smith's Wealth of Nations and Darwin's Origin of Species.

But the fundamental insight Malthus wished to impart is a simple maxim that has bothered policymakers ever since: Population grows geometrically and food supply grows arithmetically.

Indeed, it seems harmless; the scary part is when population surge isn't accompanied by a commensurate food supply increase, triggering apocalyptic consequences. Religious by disposition, Malthus wished the terrible outcomes—war, famine, and disease—could be averted by noble virtues such as moral restraint and general goodness. The only reason why the Malthusian dilemma never manifested was the Western concept of indefinite perfectibility whose core tenet was improvement ad infinitum, i.e. food production is becoming more and more advanced as the years go by. For the governments running modern industrial nation-states, however, it's usually population control and far-sighted measures for securing strategic resources that carry the day.

FAO Food Price Index
The frightening spike Note the gradual upward trend beginning in 2005 that's never gone down since--no one really wants to point a finger at how much damage rampant food commodity derivatives trading has done

In the past two hundred years Malthus' ironbound logic regarding populations and food inspired sweeping upheavals that transformed the world. The most dramatic is the Green Revolution, a period loosely bracketed between the late 40s and late 70s. The forces that set it in motion were American, being the Rockefeller and Ford Foundations along with the attendant complicity of the U.S. government, and its high priest was a tireless scientist named Norman Borlaug.

Of Borlaug, who passed away in 2009, Piedad Moya has her own recollection despite never having met him. “He's the father of the Green Revolution. The high yielding wheat varieties are Norman Borlaug's output, “ she says. “For him, he didn't like to see scientists in the office. He liked his scientists to only be in the field and not writing in an office. He was a very hard working man.”

The hard work earned Borlaug a Nobel Prize in 1970. The recognition came decades after he introduced a unique wheat strain that transformed the agrarian economy of Mexico, a feat he accomplished on behalf of his employer, the Rockefeller Foundation. The early success of the dwarf wheat in Mexico compelled its application to other parts of the world (led by Borlaug himself), particularly India and South East Asia, where a dreaded Malthusian trend of rapid population growth was perceived as a foreign policy concern in Washington, D.C.

It must be understood that in the 1950s it was imperative for the United States to stave off potential global crises that threatened its access to strategic resources. This line of thinking took doctrinal form through the efforts of think tanks, influential non-profit organizations, and policymakers. Whether it was from the respective foundations of Rockefeller, Ford, or Carnegie, the Club of Rome, Bilderbergers, the Council on Foreign Relations, the Trilateral Commission, the Morgenthau Group, or Henry Kissinger's seminal National Security Study Memorandum 200 (a document often cited by the anti-RH Bill lobby in the Philippines), all advocated that the combined pressures of rising population, resource strain, and food supply shortages was a threat to the interests of the United States and the industrialized world. It fell on the joint efforts of different financial organizations to incentivize the efficient production of food staples through a network of research facilities spanning various Asian countries.

As a regional ally with bright prospects for economic growth and projected population increase, the Philippines was an ideal candidate for such a facility. It would share the same plot of land as the University of the Philippines Los Banos and to this day both institutions maintain a mutually beneficial partnership. Headed by a team of American scientists, The International Rice Research Institute or IRRI came to be in 1961 thanks to generous grants from both the Ford and Rockefeller Foundations. Its goal was to accomplish with rice what Borlaug did with wheat.

The crowning achievement of IRRI during its early days was the hybrid rice strain called IR8, a 'miracle rice' whose origins were a combination of Dee-geo-woo-gen from Taiwan and an Indonesian variety called Peta, resulting in a high yield grain that grew faster. As a richly endowed non-profit organization IRRI had the funding and resources to send IR8 to other rice producing countries. By the mid 60s, the Philippines was able to export rice for the first time in its history and the subsequent improvements on IR8 guaranteed Asian population growth never outpaced rice production. The same positive results gave South and South East Asia a bare modicum of rice stability in the ensuing decades. Today, thanks to more generous funding by the Bill and Melinda Gates Foundation, IRRI continues its work through technological assistance and never ending research.

As innovations go, solving Asia's rice problem also created a new set of challenges. While rice production is secure, the worldwide distribution of food is generally inequitable, hunger afflicts a billion people, and the poor are more numerous than ever. The developing world's rising affluence compounds the problem further. Sound familiar? A Malthusian dilemma confronts humanity once again.

Fearmongering
In its loosest definition, a meme is a constantly perpetuating idea. A collection of memes is a memeplex, a system of interlocking ideas that form a single recurring belief. The awareness of a food crisis is a memeplex; a very tangible memeplex that finally entered the mainstream of public discourse in 2007. 2007 was the year when the combined pressures of rapid bioethanol investment, financial speculation, soaring oil prices, and emerging middle class consumption in developing countries finally pushed food prices to record levels. The extensive press coverage solidified the consensus that scarcity and rising costs were an uncomfortable fixture of everyday life.

Understanding why the problem of global food supply is a memeplex calls for its dissection, being a whole with many different parts. In a world where most large-scale agro-industrial production is skewered in favor of industrialized countries, it took unchecked population growth in Asia, South America, Africa, and the Middle East to reinvigorate the classic Malthusian dilemma. As a matter of historical record, the chaos sweeping the Middle East began when steep food prices in Tunisia compelled a large youthful demographic to revolt. Alarming no doubt, yet population is only a bit player in a larger spectacle.

Conspicuously missing is climate change, a looming threat whose worst is yet to come. It's interesting to note that while climate change is present in most grim forecasts of population and food supply, the real agent behind present troubles is financial speculation—more on this later. It took Sophie Clayton, IRRI's public relations manager whose previous stints in Australian NGOs brought her face to face with the complexities of agricultural production, to put climate change into perspective. According to her, the climate change nightmare has yet to manifest itself. “We [IRRI] couldn't be conclusive about it,” she says. “In the Philippines there are very regular typhoons. They've been happening for decades, probably for hundreds of years. The prediction with climate change is they will happen more regularly and more intense. But when?”

She adds, “My understanding is we don't actually know where to draw the line between climate change and what's normal. But we can see the general trend is heading for more intense weather extremes. We can, in general, expect more typhoons in the future.”

Other than freak climate, there are more than enough clear and present threats to the delicate links that feed the world. The most potentially dangerous in the short term are the depletion of freshwater and the spread of aridity, both phenomena happening in the most densely populated areas on earth. When it comes to freshwater, it takes little foresight to anticipate a time in the near future when its value is the same as oil. The great natural irrigation channels and bringers of abundance to wheat and rice growing regions are shrinking. This is the sad state of the Mekong River as massive hydroelectric projects are causing historic drops in water levels. The Nile is receding as well and its greatest beneficiaries Egypt and Sudan are now grappling with a potential regional dispute with the countries partially succored by the great river's southern extent—a handful of Sub Saharan states are now claiming equal rights to its supply.

The situation is more dire when it comes to aquifers, or large underground pools trapped by subterranean rock formations. The United State's leading position as a wheat basket is the result of successfully tapping the Ogallala aquifer, a shallow reservoir whose levels are diminishing. Northern China, on the other hand, provides a vision of a worst case scenario. The area around fast developing Beijing and Tianjin is a dust bowl, a stretch of parched earth and sand dunes. The remarkable fact behind this geological transformation is the man-made centralized allocation of water spelled ecological catastrophe. The only hope to restore the once fertile region is to complete a massive underground irrigation network to bring southern water sources north. The controversial South-North Water Supply Project is years from completion.

As dramatic as it sounds, if a balance of global food supply is crucial to humanity's future, then its frontiers are Northern China and Sub Saharan Africa (SSA). Small wonder then that different international organizations and agencies are moving in to make a difference. Most visible is the Bill and Melinda Gates Foundation, shich taken up the cudgels of Rockefeller and Ford by investing billions into SSA agricultural development. The foundation's goal of course, is the same as before: Let the various countries, most of them very poor, achieve a viable food production capacity as a means of securing themselves and global markets.

Beyond environmental degradation and geopolitical factors, the invisible hand that created the present food crisis is actually in plain sight. The insidious force driving the ongoing agflation—the rampant inflation of staples such as wheat, maize, and rice—is speculative skulduggery among the great financial institutions mostly clustered in New York; Goldman Sachs and Meryll Lynch for starters. But they weren't the only participants. The rogue's gallery also includes the London financial scene and heavyweights like Citibank, Deutsche Bank, Bank of America, JP Morgan, and HSBC.

The problem began in 2005, when financial markets in the United States looked dodgy (a run up to the mortgage meltdown three years later), commodities future markets became ever more attractive. Thence came the unregulated speculation in food derivatives, primarily wheat and maize. Hedge funds were created so that speculators could bet on food prices, a practice that led to unprecedented rises in staples even when supply and demand reflected no shortages. While this practice has been roundly condemned as unethical, if the Rome-based Food and Agricultural Organization's latest report is anything to go by, it's still rampant.

The awful truth is the near-permanent food crisis is a system failure. Supply, though susceptible to the vagaries of nature, is flexible enough to address burgeoning needs. The problem is the complex network of closely interrelated food sources spread across continents are vulnerable to unpredictable disruptions that occur in quick succession. If the lessons of 2007-2008 are ignored and high stakes gambling on commodities prices aren't regulated, the turbulence shaking food prices isn't going away.

In the meantime, with China's middle class consuming more beef, almost limitless hectares of soybeans grown in Brazil displace wheat to feed Chinese cattle, and Brazil doesn't mind.

Obrigado, Brasil
Unlike much of the first world and unlike other BRICS countries, Brazil has the cerrado. It's a 200 million hectare biodiverse savanna stretching across the edge of the Amazon, a northeastern swath of nature preserve similar to what's found in Africa. For a country that continues to grapple with third world poverty levels, Brazil had the foresight to transform the cerrado into a vibrant frontier where anything could be grown.

The remarkable change that swept the cerrado in the last thirty years constitutes a self-contained Green Revolution. The cerrado's soil was originally unfit for cultivation until an ambitious government program to mix it with lime paved the way for large scale farming. Since then, Brazil's agricultural output has soared and glittering ultra-modern farms funded by investor capital have sprouted across reclaimed land. What's surprising is much of the cerrado is unused and its development spares the fragile ecosystem of the vast Amazon rain forest to its north.

Already a leader in raising cattle and growing wheat, corn, and sugar—Brazil's bioethanol drive is a contributor to present agflation—another very lucrative crop is soybeans for China's huge pork industry. Brazilian soy isn't an indigenous crop but was brought by Mennonite immigrants from Russia several decades prior. Given Brazil's natural fecundity in land, water, and human potential, it now ranks as the a leading soy producer together with the United States. So huge is the demand for Brazilian soy that local government officials were up in arms earlier this year when the Chongqing Grains Group tried to buy 130,000 hectares of cerrado land for soybeans. The tiff hardly disrupted Sino-Brazilian relations as a $7 billion dollar soybean deal was signed on the same month with a similar pact made with Argentina.

The overwhelming success of the cerrado proves that concrete solutions to the future food economy are not beyond reach. The sheer potential of Brazil's agricultural sector is so vast that as early as 2008, former president Luiz Inacio Lula da Silva already declared the country was poised to become “a granary of the world.” At the rate Brazil is going, the vision proclaimed by Lula da Silva is drawing near. Hopefully it saves the world from a Malthusian endgame.

Print ed: 09/11

 

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