read the article KUANTAN, Malaysia: Rising prices for cooking oil in India are forcing residents of Mumbai to ration every drop. Bakeries in the United States are fretting over higher shortening costs. And here in Malaysia, brand-new factories built to convert vegetable oil into diesel for trucks sit idle, their owners unable to afford the raw material.
This is the other oil shock. Shortages and soaring prices for palm oil, soybean oil and many other types of vegetable oils are the latest, most striking example of a developing global problem: costly food.
A PRECIOUS COMMODITY — In Mumbai, Rajkanya Kawle, 11, held palm oil for her family’s dinner.
The Food and Agriculture Organization, an agency of the United Nations, reported that its index of export prices for 60 internationally traded foodstuffs climbed 37 percent last year. That was on top of a 14 percent increase in 2006, and the trend has accelerated in the past few weeks.
In some poor countries, desperation is taking hold. Just in the last week, there have been protests in Pakistan over wheat shortages and in Indonesia over soybean shortages. Egypt has banned rice exports to keep food at home, and China has put price controls on cooking oil, grain, meat, milk and eggs.
http://terrafirmarealestate.ca/2018/01/ According to the Food and Agriculture Organization, food riots have erupted in recent months in Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen.
“The urban poor, the rural landless and small and marginal farmers stand to lose,” said He Changchui, the agency’s chief representative for Asia and the Pacific.
A startling change is unfolding in the world’s food markets. Soaring fuel prices have altered the equation for growing food and transporting it across the globe. Huge demand for biofuels has created tension between using land to produce fuel and using it for food.
A growing middle class in the developing world is demanding more protein, from pork and hamburgers to chicken and ice cream. And all this is happening even as global climate change may be starting to make it harder to grow food in some of the places best equipped to do so, like Australia.
In the past few years, world demand for crops and meat has been rising sharply. It remains an open question how and when the supply will catch up. For the foreseeable future, that probably means higher prices at the grocery store and fatter paychecks for farmers of major crops like corn, wheat and soybeans.
There may be worse inflation to come. Food experts say steep increases in commodity prices have not fully made their way to street stalls in the developing world or supermarkets in the West.
Governments in many poor countries have tried to respond by stepping up food subsidies, imposing or tightening price controls, restricting exports and cutting food import duties.
These temporary measures are already breaking down. Across Southeast Asia, for example, families have been hoarding palm oil. Smugglers have been bidding up prices as they move the oil from more subsidized markets, like Malaysia’s, to less subsidized markets, like Singapore’s.
No category of food prices has risen as quickly this winter as edible oils, sometimes with tragic results. When a Carrefour store in Chongqing, China, announced a limited-time cooking oil promotion in November, a stampede of would-be buyers left three people dead and 31 injured.
Cooking oil may seem a trifling expense in the West. But in the developing world, cooking oil is an important source of calories and represents one of the biggest cash outlays for poor families, which grow much of their own food but have to buy oil in which to cook it.
Few crops illustrate the emerging problems in the global food chain as well as palm oil, a vital commodity in much of the world and particularly Asia. From jungles and street markets in Southeast Asia to food companies in the United States and biodiesel factories in Europe, soaring prices for the oil are drawing environmentalists, energy companies, consumers, indigenous peoples and governments into acrimonious disputes.
The oil palm is a stout-trunked tree with a spray of frilly fronds at the top that make it look like an enormous sea anemone. The trees, with their distinctive, star-like patterns of leaves, cover an eighth of the entire land area of Malaysia and even greater acreage in nearby Indonesia.
The palm is a highly efficient producer of vegetable oil, squeezed from the tree’s thick bunches of plum-size bright red fruit. An acre of oil palms yields as much oil as eight acres of soybeans, the main rival for oil palms; rapeseed, used to make canola oil, is a distant third. Among major crops, only sugar cane comes close to rivaling oil palms in calories of human food per hectare.
Palm oil prices have jumped nearly 70 percent in the past year because supply has grown slowly while demand has soared.
Farmers and plantation companies are responding to the higher prices, clearing hundreds of thousands of hectaes of tropical forest to replant with rows of oil palms. But an oil palm takes eight years to reach full production. A drought last year in Indonesia and flooding in Peninsular Malaysia helped constrain supply. Worldwide palm oil output climbed just 2.7 percent last year, to 42.1 million tons.
At the same time, palm oil demand is growing steeply for a variety of reasons around the globe. They include shifting decisions among farmers about what to plant, rising consumer demand in China and India for edible oils, and Western subsidies for biofuel production.
In the United States, farmers have been planting more corn and less soy because demand for corn-based ethanol has pushed up corn prices. U.S. soybean acreage plunged 19 percent last year, producing a drop in soybean oil output and inventories.
Chinese farmers also cut back soybean acreage last year, as urban sprawl covered prime farmland and the Chinese government provided more incentives for grain. Yet people in China are also consuming more oils. China not only was the world’s biggest palm oil importer last year, holding steady at 5.2 million tons in the first 11 months of the year, but it also doubled its soybean oil imports to 2.9 million tons, forcing buyers elsewhere to switch to palm oil.
Last year, conversion of palm oil into fuel was a fast-growing source of demand, but in recent weeks, rising prices have thrown that business into turmoil.
Here on Malaysia’s eastern shore, a series of four-story-high green and gray storage tanks connect to a labyrinth of yellow and silver pipes. The gleaming new factory has the capacity to turn 116,000 tons a year of palm oil into 110,000 tons of a fuel called biodiesel, as well as valuable byproducts like glycerin. Mission Biofuels, an Australian company, finished the factory last month and is working on an even larger factory next door.
But prices for palm oil have spiked so much that the company cannot cover all its costs and has idled the finished refinery while looking for a new strategy, like asking a biodiesel buyer to pay a price linked to palm oil costs, and someday switching from palm oil to jatropha, an inedible weed.
“We took a view that palm oil prices were already high; we didn’t think they could go even higher, and then they did,” said Nathan Mahalingam, the company’s managing director.
Biofuels accounted for almost half the increase in worldwide demand for vegetable oils last year, and represented 7 percent of total consumption of the oils, according to Oil World, a forecasting service in Hamburg, Germany.
The growth of biodiesel, which can be mixed with regular diesel for use in heavy engines, has been controversial, not only because it competes with food uses of oil but also because of environmental concerns. European conservation groups have been warning that tropical forests are being leveled to make way for oil palm plantations, destroying habitat for orangutans and Sumatran rhinoceroses while also releasing greenhouse gases.
The European Union has moved to restrict imports of palm oil grown in unsustainable ways. The measure has incensed the Malaysian palm oil industry, which had plunged into biofuel production in part to satisfy European demand.
Even in Malaysia, the center of the global palm oil industry for half a century, spot shortages have cropped up. Recently, as wholesale prices soared, cooking oil refiners complained of inadequate subsidies and cut back production of household oil, sold at low, regulated prices.
Street vendors in the capital, Kuala Lumpur, complain that they cannot find enough cooking oil to prepare roti canai, the flatbread that is the national snack. “It’s very difficult; it’s hard to find,” said one vendor who gave only his first name, Palani, after admitting that he was secretly buying cooking oil intended for households instead of paying the much higher price for commercial use.
Many of the hardest-hit victims of rising food prices are in the vast slums that surround cities in poorer Asian nations. In Dharavi, a sprawling slum in Mumbai, the former Bombay, the nine members of the Kawle family are coping with recent price increases for palm oil, though it is difficult with just one member working as a laborer for $60 a month. The family has responded by eating fish once a week instead of twice, seldom cooking vegetables and cutting its monthly rice consumption. Next to go will be the weekly smidgen of lamb.
“If the prices go up again,” said Janaron Kawle, the family patriarch, “we’ll cut the mutton to twice a month and use less oil.”
Contributing reporting were Andrew Martin in New York, Anand Giridharadas in Kale, India, and Michael Rubenstein in Mumbai.
By Keith Bradsher
Saturday, January 19, 2008Source: International Herald Tribune