Multitudes of Variables Leading to Crisis Scenarios - Essay Example

RUNNING HEAD: The Global Food Crisis The Global Food Crisis: Multitudes of Variables Leading to Crisis Scenarios BY YOU YOUR SCHOOL INFO HERE HERE The Global Food Crisis: Multitudes of Variables Leading to Crisis Scenarios The Issue At a time period across the globe in which many nations are experiencing recession and inflationary prices at the macroeconomic level, the situation of supplying enough food globally to meet demand is becoming a crisis situation. Alternative biofuels designed to reduce dependency on foreign petroleum is adding to this calamity, as well as natural disasters which are occurring at an alarming pace all across the world. These disasters reduce volume output of various agricultural products which only reduces global supply of many food products. The crisis stems from an inability to feed the global poor as well as the financial burdens that shortages of food place on international governments and general citizens. There is no simplistic fix to this problem and therefore knowledge is power to assist innovators in aiding toward finding a quality solution to diminishing food supply. Purpose of Research The purpose of this secondary, desk-based research study is to inform the general reader about the multitudes of problems associated with meeting supply versus demand volumes to feed the hungry and also sustain new product development efforts using food products. This information is worthy of consideration as the future of food production and distribution, currently, looks considerably bleak and it ultimately impacts the quality of life for virtually every international citizen. The information gleaned from this secondary research study provides new information and factual statistics about the current state of the global food situation as well as future projections that continue to paint a dismal picture of success in meeting food demand internationally. There is no specific target audience that would best gain from the knowledge provided in this study as the impact of the global food crisis has influence on scientists, government, general global citizens, and even stock market investors interested in commodity prices and value of their investment dollars. The Crisis Catalysts Russia, over the last two years, has experienced significant volume reduction on agricultural output of grain due to heatwaves and drought conditions that eroded more than one-third of the country’s entire crop output (Gorst, 2011). To ensure that the Russian people had enough stored grain to sustain its population’s needs, export bans were imposed on all wheat products until the country was able to improve total grain output. This export ban created a situation where wheat prices soared in European markets, leading to ongoing internationally-driven disapproval (Gorst). A similar situation occurred in Australia just this year due to excessive flooding caused by torrential rains and a variety of tropical storms (Mendleson, 2011). Australia relies on its export capabilities for a variety of crops for financial security, as does many of its import partners that rely on adequate crop volumes produced in Australia. Even though the disasters in Russia and Australia are not preventable, this provides excellent opportunity for innovators to develop new farming techniques as a contingency plan to prevent such shortages from occurring in the future. These efforts could include refertilization of non-fertile lands in Africa or developing new greenhouse technologies for indoor food production. Biofuels are also adding to the problem as countries attempt to develop new fuel technologies to avoid over-dependence on foreign, traditional oil. According to a recent report, biofuels consumed 20 percent of sugar cane crops produced across the world between 2007 and 2009, thus raising these commodity prices (Chaffin, 2011). Even though innovators looked toward this new biofuel technology as a means to reduce the costs of foreign oil, it has led to significant shortages in the food supply. This is an indicator that biofuels may require a new innovative approach if they are unable to provide alternative fuel sources without, literally, causing hunger problems across the globe. The U.S. is also experiencing issues related with food shortages. America controls 55 percent of the total global trade in corn and a significant portion of soybeans and cotton (Wall Street Journal, 2011). Since global markets have no other avenue for importation due to the export bans in major producing countries such as Russia and Australia, purchasing these products from the U.S. strains local farmers that rely on low-cost grain and other agriculture to feed livestock (Wall Street Journal). This puts a larger price burden on U.S. consumers who must pay more for products using these key agricultural products that continue to put domestic citizens under the poverty line due to inflationary pricing on food. Innovators could potentially develop new feeding options for livestock farmers as a means of reducing this shortage and curb pricing hikes. According to a World Bank report from 2011, a mere 10 percent price increase in global food prices could put 10 million people across the world under the poverty line (The Pak Banker, 2011). A 30 percent price increase leads to three times that volume of new poor citizens (The Pak Banker). This is considerably important considering in 2010, 44 million people had already been driven to poor class status due to the massive inflation caused by shortages in the global food supply and intense pricing increases on multiple commodities. Innovators in Wall Street and other investment markets should recognize their role in driving up these prices and attempt new methods of controlling such spikes considering the high volume of people who are and might potentially be driven to financial woe. It is a common viewpoint that major agencies across the globe continue to provide high dollar funding to assist in new agricultural developments. However, this is a fallacy. According to the World Bank, such funding has “collapsed” and “plummeted” by more than half between 1984 and 2004 (Thurow, 2010, p.102). This is perhaps why many stakeholders that either benefit from rising food prices (such as the investor) or those directly impacted by food shortages do not take innovative steps to attempt to control pricing or gain new avenues of funding for alternative agricultural development efforts. Even though knowledge is power in relation to understanding the complex dynamics of the global food crisis, there needs to be more private investment in alternative methodologies to assist in curbing this growing problem related to hunger and cost variables. The Long-Term Implications Though there does not seem to be a short-term, innovative solution to the problems associated with what is driving the global food crisis, it is necessary for the international community be become fully educated about its impact and potential solutions. Clearly, biofuel consumption continues to erode the global food supply; in some ways like the proverbial robbing of Peter to pay Paul. It is not creating the type of solutions required, especially considering that gas prices are continuously on the rise. The impact to the consumer that would ultimately rely on biofuel consumption is minimal, if any, and there must be alternative scientific methodologies put into place to ensure an adequate solution to foreign oil dependence globally. Though not much can be done about natural disasters and their toll on the global food situation, there are many countries that have ample land that could be transformed into worthwhile agricultural systems if the proper funding were delivered. Since there is not adequate funding from existing large-scale organizations, innovators should seek out venture capitalists or other interested investors to assist in turning these arid lands into fertile lands through technological development and new land use principles. There are a large volume of billionaires and multi-millionaires across the globe always looking for new investment opportunities and they, too, would ultimately build themselves security through these efforts. Innovators in marketing, as one example, could assist in gaining this funding if enough dedicated labor were put into alternative funding efforts. Conclusion There seems to be too much foreign reliance on food importation to sustain their local populations that continues to add to the problem with the growing global food crisis. Clearly, investors in Wall Street are not aiding in commodity price fixing or reduction and they should be taking a more active role in assisting in these efforts. Many of the food prices are controlled by these independent investors in multiple markets and should therefore be the target of new and innovative practices related to the stock market. However, their individualized profiteering objectives seem to be the catalyst for applauding such price increases and thus there is no adequate system of inflationary control. It should be said that there should be more international cooperation between governments in order to curb over-reliance on foreign imports of food products in order to create an innovative solution to diminishing supply and rising prices. It has been said that two heads are better than one when it comes to brainstorming solutions and a more cooperative environment is necessary to promote any kind of meaningful change. Price increases and shortages are affecting the entire global population and only through innovation in science, government and investment agencies will any quality solution be determined and launched successfully. Knowledge is indeed power, however creativity and cooperation can only create valuable solutions to the crisis. References Chaffin, Joshua. (2011), “Report Urges End to G20 Biofuel Subsidies”, Financial Times, London. June 10, p.4. Retrieved June 17, 2011 from www.proquest.com. Gorst, Isabel. (2011), “Lifting Wheat Beans Yields Fresh Trouble for Russia”, Financial Times, London. June 15, p.22. Retrieved June 17, 2011 from www.proquest.com. Mendleson, Rachel. (2011), “The Future is Hungry”, Canadian Business, 84(4), p.45. Retrieved June 17, 2011 from www.proquest.com. The Pak Banker. (2011), “High and Volatile Food Prices Continue to Threaten the World’s Poor”, April 21, HT Media Ltd. Retrieved June 18, 2011 from www.proquest.com. Thurow, Roger. (2010), “The Fertile Continent: Africa, Agriculture’s Final Frontier”, Foreign Affairs, 89(6), pp.102-111. Retrieved June 18, 2011 from www.proquest.com. Wall Street Journal. (2011), “U.S. Farmers Head into Key Stretch for Harvests”, March 7. Retrieved June 18, 2011 from www.proquest.com. Read More