Gwynne Dyer: The rich, the poor, and the hungry

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Two months ago, the United States Department of Agriculture forecast the biggest maize (corn) harvest in history: 376 million tonnes. After two months of record heat and drought in the U.S. Midwest, it has dropped its forecast to 274 million tonnes. So by early July it was predicting that the price per bushel of maize would exceed $8 for the first time in history, and it’s now forecasting $8.90.

The heat wave in Russia, while nowhere near as bad as the one in 2010, is also cutting deeply into Russian wheat production. There will still be enough for domestic consumption, but Andrei Sisov of the Moscow-based farming consultancy SovEcon said last week that he expected Russian wheat exports to drop from 28 million tonnes to only 13 million. For this and other weather-related reasons, wheat prices are on their way up too.

High wheat prices hit human consumers directly, but high maize prices hit even harder in the long run because huge amounts of maize are used to feed animals and provide oil for processed foods. World food prices in general are on the way back up, and it’s beginning to look like a pattern, not a series of accidents.

The last big price spike, in 2007-09, had a huge impact in developing countries, where many people spend around 40 percent of their income on food (compared with only about 10 percent in developed countries). If you’re already spending almost half your income on food and the price soars, you just have to give your children less food—which is why some people see the revolutions of the “Arab Spring” as delayed reactions to the last spike.

Meanwhile, on a different planet entirely, the McKinsey Global Institute, the business and research arm of management consultancy McKinsey & Company, published another report in June. It’s the latest in an endless series of ever-bolder estimates by various “global institutes” of how fast the demand for goods and services is growing around the world.

The themes of McKinsey’s new report, “Urban World: Cities and the Rise of the Consuming Class”, are familiar enough. The world’s economic centre of gravity is moving to Asia; huge numbers of new “consumers”— people with average annual incomes over $3,600 who buy more than just food and basic shelter—will be joining the global market by 2025; there are wonderful opportunities out there for clever investors.

The only new wrinkle in this document is the bit about how 65 percent of “global growth” to 2025 will happen in the “City 600", as they call it: the world’s 600 biggest cities. And what McKinsey calls “the Emerging 440 cities”—those among the 600 that are in the rapidly developing countries—will account for almost half of the total growth in world demand to 2025.

Then come the numbers. As the emerging economies grow, they’ll all start buying fridges and baby food and, eventually, cars. Whoopee! We’ll all get rich selling things to the Chinese!

But nowhere in the report does McKinsey deal seriously with the impact of a predicted total of 2.6 billion consumers, up from only 0.8 billion now, on world demand for food. Yet meat consumption soars as incomes rise. Feeding animals to produce meat puts huge pressure on grain resources, so all food prices rise, for rich and poor alike.

Combine the rise in meat consumption with an extra billion people and severe constraints on food production, most of them related to climate change, and world food prices in 2025 could be two to three times higher in real terms than they are now. That means that the poorest starve, and that a lot of McKinsey’s promised new “consumers”—those who can spend on other things than sheer survival—don’t make it into the middle class after all.

The same rationing by price is likely to apply to everything else that matters. Indeed, the prices of energy and raw materials, which fell consistently through most of the 20th century, are already back up to where they were in real terms a century ago. There are not going to be 1.8 billion new consumers in 13 years’ time, the poor will be more desperate than ever, and political stability in many developing countries will be just a memory.

The demands of consumers, like the sheer number of human beings, can in theory expand indefinitely, but on a finite planet with dwindling resources and a changing climate the cost of meeting consumer demand is going to go up very steeply. It is probably going to get very ugly out there.

And as for China, the poster child for miraculously fast economic growth—well, China has one-seventh as much water and one-tenth as much arable land per capita as North America. When things get tough, that is going to matter a lot.

Comments (8) Add New Comment
jonny .
Good thing I try not to eat wheat or corn. I rarely eat meat as well.
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delia ruhe
Those who value the billions as potential consumers are cancelled out by those who see climate change as an effortless way to thin out those over-breeding, over-populating, ever-needy countries of the "Third World."
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miguel
McDonalds' Fries will go way up in price. Deep frying a potato is the most expensive way to cook. A lot of maize, soybean, sunflower, and rapeseed is used to produce food fat, which is killing you to boot.
Miguel
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weldon
Theoretically, if there is no food on the shelves, it doesn’t matter if you are rich or poor. But do not despair; apparently there is food value in bugs and raw vegetation
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KiDDAA Magazine
Maybe Dyer should also mention just how much money some countries, like the United States spend on wars and military. They say the Iraq war caused trillions and guess what no Wmds. Now israel and some Americans say Iran has nukes but American intelligence says they do not. More wars, more bs and more poor.
The sickening rich are not taxed, lie to the goverment and poor and promote sickness.
Now both husband and wife have to work 12 hours to pay the mortgage. Western civilization is seeing a plague of greed, stupidity and lies.
Dyer knows big corps dictate how we eat, what we eat and how much we pay.
Phuck them. KiDDAA Magazine says grow your own and support community farmers and stores.
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McRocket
Bottom line? If you are thinking of having kids - don't.
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paul york
All the more reason to stop subsidizing industrial livestock operations and get rid of factory farming. Human beings can be much healthier on balanced plant-based diets anyway (see the film Forks Over Knives). This article is part of the larger picture. It does not mention that industrial livestock operations also cause 18 to 30% of all greenhouse gas emissions, responsible in part for the drought that has made feedcrops more expensive. The huge waste of land and water and fossil fuels that these feedcrops represent could be greatly mitigated by turning to plant-based diets. As the price of meat and dairy rises, this will happen, and people will turn to growing their own food locally, to survive - often in backyards or community gardens. Ultimately that is the solution, which will be healthier, more sustainable, and kinder to animals, who are currently suffering and dying in the billions for no good reason.
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Joe Smith
@delia ruhe: in response to your comment "climate change as an effortless way to thin out those over-breeding, over-populating, ever-needy countries of the "Third World.""
- might I remind you that the inustrialized countries have since the industrial revolution contributed the lions share of emissions. They built their wealth on "emissions". Why deny developing nations the same right, the same conditions for creating better living for their citizens? Can't accept that? Then pitch in an pay for cleaner energy in poor countries!!
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