Preventing a Food Crisis in the Face of Rising Grain Prices

The prices of corn and other grains are rising, and countries around the world are concerned about food price inflation.

Food prices affect more than just the global economy, they bring about serious problems – political unrest and starvation in the developing world – that affect the entire international community.

During the 2008 food crisis, there were protests against export restrictions in producer countries, as well as widespread rioting. In order to prevent a similar crisis, Japan and other nations around the world must remain vigilant.

Beginning in July, the trading prices of corn and soy beans have continued to hit historical highs at the Chicago Mercantile Exchange. This month, the food price index announced by the U.N. Food and Agriculture Organization (FAO), which displays global trends, showed a sudden increase after two years of relative stability.

One reason for the increases are the severe droughts – the worst in half a century – going on in the U.S. as a result of record-breaking heat waves and low rainfall. The U.S. accounts for 40 percent of the world’s corn and soy beans. With droughts affecting roughly 60 percent of the nation, major declines in production are being forecast.

Russia, China and India have all experienced unseasonable weather. Russia estimates a 20 percent decline in wheat production.

Monetary easing in developed countries has resulted in excess capital, which some worry will cause an influx of investment in to grain markets, and spur further increases.

Japan, who imports the majority of its grain from the U.S., is beginning to feel the effects.　Cooking oil makers have begun to raise prices. If this trend continues, tofu, miso, soy sauce, mayonnaise and other common foods in Japan will become more expensive.　The price of meat will also rise, since corn is the primary feed used for livestock. The prices of eggs and milk will follow suit.

The Japanese government and the Japanese people need to consider a plan to diversify their grain sources and minimize the effects of this crisis.

International countermeasures are also urgently needed.

The G-20 has established a new organization with the primary purpose of sharing information regarding the production, inventory, and market conditions of grains. With the cooperation of the G-20, one would hope that the prices can be stabilized and the market anxiety can be soothed.

The U.S. needs to consider temporarily halting the production of biofuel, which is produced primarily from corn, in order to produce more corn for food and livestock feed.

As meat consumption in the developing world increases, demand for livestock feed and other grains is also rising rapidly.

Every nation in the world needs to promote production through technological innovation, agricultural investment and whatever other methods are necessary.