What Are the Main Factors in Ethanol Prices?

The food crisis refers to global food shortages, sharp declines in production, and rapid price increases, which have caused unprecedented food panics and crises in the past 40 years. In 2014, the State of Food Insecurity 2014 report released by FAO stated that the world s hungry people had reached 1.02 billion, the highest level in history. ^[1] The organization even claims that this does not include those who are suffering from vitamin deficiencies, malnutrition and other forms of malnutrition. The total number of people suffering from food security may be close to 3 billion-about half of the world's total population . ^[2]

Food crisis

(Human dilemma caused by insufficient food supply)

The food crisis is also the problem of "food security", so what exactly is "food security"?

The concept of food security was first proposed at the first World Food Summit held by FAO in November 1974, when it was defined as: ensuring that anyone can get enough food for survival and health at all times . In April 1983, FAO defined the concept of food security for the second time: ensuring that all people, at all times, can buy and afford the basic food they need.

In November 1996, the Second World Food Summit made the third statement on the concept of food security: to allow all people to enjoy adequate food at all times and live a healthy and vibrant life. This definition includes three aspects: sufficient food (effective supply); adequate capacity to obtain food (effective demand); and the reliability of both. The absence of any one or two of these three factors will lead to food insecurity. ^[2]

According to the latest FAO estimates, the number of hungry people in the world continues to decrease: an estimated 805 million people have been chronically undernourished between 2012 and 2014, a decrease of more than 100 million from the previous decade and a decrease of 209 million from 1990-1992. The prevalence of undernourishment fell from 18.7% to 11.3% globally in the same period, and from 23.4% to 13.5% in developing countries.

Since 1990-1992, 63 countries have achieved the Millennium Development Goals and 125 countries have achieved the more demanding World Food Summit goals. In 11 of these 63 developing countries, the prevalence of undernourishment was below 5% in 1990-92 (due to methodological limitations, this number ensures that the results differ significantly from zero) and have been maintained at this level Within a range, and therefore no longer the primary focus of the 2014 report.

These figures indicate that the Millennium Development Goals target for hunger is within reach, that is, to halve the proportion of undernourished people in developing countries by 2015.

Despite overall progress, there are still significant differences between regions. Latin America and the Caribbean has made the most progress in enhancing food security, while sub-Saharan Africa and Western Asia have made little progress under the impact of natural disasters and conflicts. ^[1]

In 2008, a global food crisis broke out. In 2008, world food inventories fell from 30% in 2002 to 14.7%, the lowest in 30 years. The world's food reserves were only 405 million tons, enough for humans to maintain 53 Days, and in early 2007 the world's grain reserves could last for 169 days. ^[3]

China Food Crisis

(1) How much food will we need?

To know how much food we will need, we need to know how many people we will have. Figure 2 is the demographic data over the years and the author found

Food crisis suspends biofuels

Studies have shown that the root cause of soaring food prices is that global food demand has grown faster than supply. The main factor contributing to the tight supply is the increasing conversion of food into biofuels in the United States and Europe.

One of the most important structural changes is the increased linkage between the world fuel market and the food market. A quarter to a third of the increase in global commodity prices is due to biofuels. The United States uses corn to produce fuel, and Europe continues to convert wheat and maize land to rapeseed, and uses vegetable oils such as rapeseed oil to produce fuel. Since 2001, billions of dollars of investment have increased the U.S. ethanol industry's production capacity by almost three times. During the period 2004-2007, world corn production increased by approximately 51 million tons. At the same time, the production of biofuels, especially ethanol, increased by approximately 50 million tons in the United States alone. It is estimated that the consumption of corn for biofuel production in the United States in 2009 will reach 114 million tons, equivalent to one-third of the US production. Relevant data show that in 2008, the amount of food burned by automobiles in the United States could meet the needs of 82 low-income countries with food shortages.

Relevant sources have called for the suspension of biofuel production. The use of food to make biofuels harms the environment, wastes energy, and ultimately brings disastrous results to global food supplies.

Food crisis improves food aid

In the food aid system, countries have long debated the advantages and disadvantages of the two methods of in-kind assistance and cash assistance.

The usual practice in the United States is in-kind assistance, and in Europe, cash is provided to buy food locally. The United States provides half of the world's food aid, but about $ 2 billion in food aid each year comes from the remaining US food. US law requires that food be sourced from the United States and transported on American flag vessels. Usually after the U.S. government purchases, it is transferred to the recipient's local humanitarian agencies through the U.S. transportation means, and eventually these agencies are transshipped and sold at very low prices or distributed for free.

This kind of in-kind assistance in the United States has hit the production of local farmers and led to the growth of grain hoarding and other phenomena. Buying food in cash, although it may cause food prices to rise in the short term, will help increase long-term food supplies. The UN Food Program believes that food aid in cash can buy food closer to the recipient, which means lower purchase prices, lower transportation costs, and shorter transit times. To this end, the United Nations Food Programme has been working to raise more cash assistance.

Food crisis improves soil quality

Under the current situation of reduced arable land, improving soil quality and increasing food production will help alleviate food shortages.

Agricultural productivity has long been low in many regions, especially in sub-Saharan Africa. Some foundations, together with the World Bank, have begun to invest hundreds of millions of dollars in developing countries, especially in Africa, to train poor farmers and local researchers, and strive to improve soil fertility, improve farmers' planting techniques, and ultimately increase food production. The World Bank will double its loans to African agriculture, from $ 450 million to $ 800 million, to help countries and individual farmers in managing systemic risks such as drought. In Asia, improving water resource management capacity and improving irrigation conditions are expected to further increase yields. Studies by experts have shown that paying attention to the physical structure, chemical composition, and microbial status of the soil can promote soil health and improve soil quality.

Food crisis curbs speculation

The depreciation of the US dollar against the euro and other important currencies has increased the price of commodities denominated in US dollars. Various speculative funds, such as pension funds, hedge funds, and index funds, have bought agricultural futures in response to inflation. Since 2007, speculative investment in food goods has increased rapidly. After the collapse of technology stocks and the crisis of real estate derivatives, agricultural futures have become the next high-return investment target for hot money. The Bank for International Settlements estimates that hundreds of billions of dollars are currently invested in commodity funds. Speculative funds have spurred agricultural product futures prices, causing agricultural product futures prices to rise or fall sharply, deviating from the original intention of futures to eliminate trade risks, but intensifying fluctuations in agricultural product markets, affecting farmers 'expectations of future returns, and not conducive to maintaining farmers' enthusiasm for growing grain .

Relevant sources have called for curbing speculation now to prevent the formation of bubbles that ultimately cost farmers.

Food crisis eliminates unfair trade

A target to reduce agricultural subsidies in the new round of the Doha Round of the World Trade Organization has not been achieved for more than six years.

Farmers in developing countries cannot compete with farmers in developed countries who are heavily subsidized. Crops in developed countries have caused unfair competition in world agricultural trade. In the past 6 years of negotiations, countries have fully realized the harm caused by unfair trade. However, developed countries still focus their efforts on opening up the markets of developing countries, while trying to reduce their own high agricultural subsidies. Article level.

Eliminating unfair trade and rationalizing international food trade prices can help eliminate the international food crisis.

Food Crisis Implements International Assistance

The food crisis is a warning issued by the burdens facing the 6.6 billion people worldwide. In 2050, the global population will increase to 9.1 billion, and all new populations will be concentrated in developing countries.

In order to respond to the food crisis, we need to start by addressing poverty. Rich countries need to take steps to implement their 2002 commitments of 0.7% of national income for international aid. By the end of 2008, 22 committed countries had only spent 0.45% of their national aid on development aid, compared with only 0.16% of the United States. Urging rich countries to implement international aid is imminent. ^[4]