The prime directive for governments these days is to manage crises, to restore failures in every market.
The global economic crisis surfaced during a global food crisis. At the same time last year, energy crises were rampant across Central Asia, gas prices soared in Australia. Tajikistan, Latvia, and many other countries are defaulting on IMF loans and World Bank debt. The Icelandic Financial Supervisory Authority acquired most of the broken piece of Iceland’s economy. The government of Iceland was completely bankrupt. Banks across Europe were divvied up, nationalized or sold off. Vladimir Putin said Russia would begin a policy of “soft re-nationalization,” which could adequately describe the policy of every government now. Each nation has its own set of crises it’s dealing with. The automobile industry in the US: effectively nationalized. Newspapers are consolidating, so is the banking industry. Dozens of banks: literally gone. Scandal after scandal.
What is the likelihood that a rise in food prices could spiral again this harvest season? According to Stratfor, already:
Global wheat production is expected to be down about 4 percent from last year, despite more efficient production and only a 0.5 percent decline in planted area. This drop can be attributed in part to a decline in planting in the countries that produce wheat most efficiently — including a 19 percent decline in production in the United States, a 9 percent decline in the European Union and a 27 percent decline in Ukraine, all three of which are among the world’s top 10 wheat producers.
Plus the United States is leading a trend in falling corn production:
A projected decline in U.S. production of more than 7 percent from the 2008-2009 season means a significant overall decline in total global production. The projected output for the 2009-2010 season would still be the third highest total on record. However, it would also constitute the second straight year of declining outputs, down from 791.63 million tons in 2007-2008.
Should there be crop failures due to weather — and this early in the season it is difficult to project the final outcome — we could see some of the same pressures on food price and supply arise this season as in 2008. Food shortages are perhaps the fastest way to generate severe social and political instability, making the progress of global food production a critical subject of concern.