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Thursday, Oct. 25, 2012
Coping with rising grain prices
More than 30 farm ministers and deputy ministers took part in an emergency meeting in Rome on Oct. 16 organized by the U.N. Food and Agriculture Organization to discuss the soaring prices of wheat, corn, soy beans and other grains. It is regrettable that major grain exporters Russia and the Unites States, and major grain importer China did not send ministers to the meeting.
But it is said that the demand and supply situation in grain markets is not as tight as in 2008 when the world experienced a food crisis. It is important for each country to provide accurate information on food production and consumption and grain inventories to ensure transparency and prevent volatility in grain markets. Information on China's food production and grain inventories lacks transparency. Beijing must make efforts to improve its statistics.
Rises in grain prices were triggered by a severe drought that hit the U.S. Midwest this summer. From late August to early September, grain prices shot up to record highs at the Chicago Merchandise Exchange as speculative funds flowed in based on anticipation of a large reduction of grain production. An estimate by the U.S. Agriculture Department showing low levels of global grain inventories also contributed to rising grain prices. Affected by high temperatures and dry weather, wheat production also fell in Russia and Ukraine. In emerging economies, consumption of meat is increasing. Since it takes 7 kg of feed to produce 1 kg of meat, these countries are importing more grain.
In Japan, which heavily relies on grain imports from the U.S., prices of dairy products and food oil have started to rise. It is feared that prices of bread and noodles will increase. Even prices of tofu, soy sauce and miso may start to rise. The Japanese government should ask grain-exporting countries not to restrict exports. In 2008, export controls implemented by grain-producing countries exacerbated the food crisis.
It is estimated that while Japan imports about 60 million tons of food annually, it discards about one-third of it. Japanese citizens and companies must be made aware of their actions and change their behavior. Japan also can help to increase global food production. In developing countries, food production per unit area is low because their agricultural technology is not advanced. The Japanese government should encourage farm organizations to share their advanced agricultural knowledge and methods with developing countries.