First, that not only is the global population growing by about 220,000 every day, mostly in emerging markets, but per capita consumption is also growing in these countries. Many in India and China are believed to be eating better on account of improving incomes, spending about 30-40% of their income on food, as against 10% in the developed world. Yet, some studies have shown the paradox of higher incomes correlating with lower consumption of cereals and pulsesthey seem to prefer more tea and sugar!
Second, that higher incomes mean higher consumption of meat products in countries like India, which implies higher consumption of grainas it takes about 6-10 kg of grain to produce 1 kg of meat. Even reputed economists from places like Oxford seem to have fallen for this simplistic assertion. The argument for reduced meat consumption to ensure food for all began in the 1970s and was aimed primarily at countries which have large organised cattle farms. In countries like India, only poultry has large units. All else is mostly from grazing animals or culled from the old.
Other factors may have contributed even more significantly. The first among these is biofuels in the US and Latin America. By an FAO study, consumption of cereals has been growing faster in the US at about 11.8% in 2007 over the previous year compared to 1.8% of China and 2.17% of India. About one-third of the corn produce in the US is being used for making ethanol. With crude hovering around $120 per barrel, and the grandly stated addiction to gasoline not giving way at all, farm-level economics will only whet the appetite for biofuels.
Every farmer can be in the oil business with a little investment. It is known that corn-based biofuels are more inefficient than sugar-based ones or cellulosic ethanol that can be produced on non-agricultural farms. Yet, US tax incentives may have already induced a new addictionto corn-based biofuel.
The second factor is the disincentives to agriculture combined with migrations to cities and choice of other livelihoods. In India, social mobility once implied getting away from agriculture even if it meant a poor job of a sweeper in the Middle East. The third factor is the Australian draught. There will be others that will haunt one region or the other in future. Fourth is the export controls in many countries abruptly reversing the clamour for prying open markets for agricultural produce. Fifth is the adverse impact of infrastructure projects and the explosive rise of the real estate sector that have been cannibalising poultry sheds and agriculture land surrounding towns and cities.
It is probably for the first time that a contagion is evident even in agriculture, a problem for which there will be few swift countercyclical solutions. This needs deeper analysis and reasoned action, for an overkill will lead to massive distress of surpluses and spiralling suicideswhether in Karimnagar or Kentucky (See my column on August 9, 2004).