Deja Food: Will Social Unrest Surge As Corn Prices Soar?

Tyler Durden's picture

With Corn hitting its highs again, we are reminded that global food production has been hitting constraints as rising populations and changing diets hit against flattening productivity, water and fertility constraints, and the likely early effects of climate change. As was described in the recent all-encompassing theory of global-collapse, there is general agreement that one of the contributing factors to the rolling revolutions beginning at the end of 2010 was increasing food prices eating into already strained incomes. It is unclear how much impact easing has had on food prices this time, weather has very much made its presence felt (as we noted here). From one omnipotent force (central bankers) to another (hand of god), the fear is that more broadly, food is likely to be a more persistent problem than oil supply. This is because we require almost continual replenishment of food to stay alive and avoid severe social and behavioral stress - food is the most inelastic part of consumption. This says nothing of the pernicious inflationary impact that will likely quell the kind of free-flowing printing so many hope to see from China et al.

The FAO food price index and outbreaks of social unrest. (Lagi et. al.)

Global food production has been hitting constraints as rising populations and changing diets hit against flattening productivity, water and fertility constraints, and the likely early effects of climate change.

One of the main effects of the Green Revolution of the 1950's, 60’s and 70's was to put food production onto a fossil fuel platform. Modern food production relies on pesticides, fertilisers, machinery, drying systems, long-haul transport, packaging, freezing and so on, all fossil fuel dependent. Modern seed varieties require more water, which requires more complex irrigation and aquifer pumping, again requiring more fossil fuel input, and putting more strain on already stressed water supplies. By various estimates, between six and ten fossil fuel calories are used to produce every calorie of food.

More directly, food is now being converted into fuel, adding further pressure to already strained supplies. Today, 40% of the US corn crop is used to produce biofuels, and globally, biofuels consume 6.5% of grains and 8% of vegetable oil production. The rise and fall in oil prices has been matched by food prices.

Food is the most inelastic part of consumption. Like oil, rising prices drive out other consumption, which can lead to job losses, unemployment, and defaults. The most developed countries spend about 10% of their disposable income on food, however in many parts of the world it is over 50%.

At this point it is illustrative to look at how the interactions between the financial, oil and food economies can have major unexpected repercussions. When major stresses are transmitted along complex and increasingly vulnerable inter-dependencies, there is a greater risk of system wide contagion and instability.

While food prices remained high, they received a further stimulus and increased volatility via massive quantitative easing in the US. The two rounds of QE were to support battered financial institutions. This injection helped drive a global commodity bubble, affecting an already stressed global food market. Pressure was displaced from the US onto the plates of citizens in the Middle-East and North Africa.

There is general agreement that one of the contributing factors to the rolling revolutions beginning at the end of 2010 was increasing food prices eating into already strained incomes. Food is, and always has been a mainstay of welfare and social peace. Figure:9 shows the recent correlation between the FAO index and outbreaks of political and social unrest.

One outcome was the revolution in Libya, a result of which was the loss of nearly two million barrels of high quality oil a day to the global economy. Thus oil prices remained high, averaging well over $100 even as fears for the global economy increased and growth in many major economies began to stall. From this perspective, QE temporally displaced risk to banks that returned as higher oil and food prices, via the real economy and a distant revolution.

More broadly, food is likely to be a more persistent problem than oil supply. Firstly, this is because we require almost continual replenishment of food to stay alive and avoid severe social and behavioral stress. Secondly, the loss of food in society had a far deeper impact than oil. Finally, the implications of evolving systemic risk means food production, access and affordability would be undermined.

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MillionDollarBogus_'s picture

never understood why corn is considered food.  

eat a bunch of corn, take a dump the next day and have a look.

about as usefull a food as celery.

Hmm...'s picture

your poor understanding doesn't change the fact that billions of people rely on corn for their calories to stay alive.

corn is nothing like celery.  in fact, a high corn based diet leads to OBESITY (just look around America, a high corn intake country).

Precious's picture

Uh, corn flakes, corn bread, tortillas, polenta, etc . . .

AnAnonymouses's picture

US citizenism result in fat American corn-fed beef flaps around Chinese member!

Tippoo Sultan's picture

Corn ?

Corn whiskey, by God...Georgia Moon. 80 proof. Shine on !

AldousHuxley's picture

social unrest?

 

how about lower healthcare costs because Americans lose some weight by not over eating since food costs more?

Papasmurf's picture

Americans will continue to overeat.  The will just subsititute malamine in their corn chips and colas.

Elliott Eldrich's picture

You are SO far off with that comment. IMHO the single biggest cause of obesity in the US is malnutrition. People who eat high-calorie foods that are over-processed and have little to no micro-nutrients end up overeating, because their bodies are not getting the nutrition necessary to sate their hunger. I've personally lost over 60 pounds simply by taking nutrition seriously, doing daily juicing w/carrots, apples etc. and adding moderate exercise to my daily routine.

So sure, take the miserable, half-starved wretches eating McCrap because that's all they can afford, and then take even THAT away from them. Good plan! I'm sure that will work out just dandy. Why not just say "let them eat cake" while you're at it? Let us all know how that works out for you...

Dr.Vannostrand's picture

LMFAO!!!

Short corn (shit, so is GS), Long corn-fed beef flaps FTMFW!

Ignorance is bliss's picture

High fructose corn syrup...the sugar in coke, pepsi, cereal, peanut butter, ketchup. Corn is what they feed the live stock...cows, pork, etc and just about everything else the masses eat.

CrazyCooter's picture

Well, with the caveat that old school Texans like their Dublin Dr Pepper. Yes, you rich mofos can order it online and have it shipped to impress your friends/clients/mistresses (what mistress doesn't like a real sugar daddy).

I used to go to specific stores in the DFW area to buy "mexican cokes", which were imported and made with cane sugar. Curiously, right before I high tailed it to AK they went to "either/or" cane sugar/corn syrup on the paper label which was stuck on the reUSED green glass bottles. You know, with the "white glass" dammage on the green glass bottle. You know, when people reused shit. Before the hippies showed up with recylcing.

Anyway, cane sugar soda > any other soda.

I don't drink sodas. I haven't for years. But, I will make room in my diet for the occasional 8oz or 10z old school tasty if I can buy them. Virgil's rootbeer is another rare exception because its just damn good.

But, I am a gold bug too. Old money, old soda, new world. Fuck the new world, you will come back around to my old money. And my old soda. Am I mean? Yeah, I am. Mean reversion. In soda.

Regards,

Cooter

CrazyCooter's picture

JFC. Nothing is sacred.

http://www.nytimes.com/2012/07/15/us/after-parting-ways-with-dr-pepper-dublin-bottler-goes-on.html

Sorry for the clearly dated information.

<<insert Jackie Gleason "Sum Bitch" youtube/audio fragment here>>

I still don't drink corn syrup sodas. Cane sugar, sometimes.

Regards,

Cooter

tekhneek's picture

Agreed Cooter -- and you know damn well what's causing this wreck aside from the drought, the drought's no joke... I'm from Texas. I've lived through decades of summers in the 100+ degree Texas heat. I've said it probably 15-20... hell, maybe even 100x to people I discuss our "agricultural" position with: The biggest threat is the amount of people. Feeding 7+ billion people is hard work.

Hard work for the planet not just farmers. I'm a pretty experienced gardener and I still have vegetables go south on me constantly that I was hoping to harvest. Can you imagine if I had no backup? Even with all the knoweldge I've worked to acquire I still need water otherwise it's pointless. This is happening across the globe. People are committing suicide because it's not that they can't plant seed, they have no water to water the seed with.

Top it off in 'Murica with billions of pounds of chemical based fertilizer, pesticide, herbicide... "everycide" and you've got yourself one big-ass desert in the making. It's no surprise to me or most people who understand what extended use of chemical based soil stimulants do over decades with no rest or cover crops.

Either way I'm pretty sure they'll move from massive corn field to massive corn field after they realize pouring bleach on soil then planting genetically modified bleach resistant seed is a bad idea because: It kills the soil and everything that is required to remineralize that soil for additional growth. No grass to shield the soil from the sun thus reserving water, no nutrient cycle or additional nitrogen from natural grasses and manure, nothing sustinable. Mycorrhizae? Kill it all. Nitrogen was totally present in soil before. After all the land is just a plot for chemicals and seeds, it's not alive. A mass of literal "dirt" -- not soil is being sown across the mid-West. I'll be damned if people are "surprised" this shit is S-T-U-P-I-D and is going to kill billions eventually.

Who fucking cares though, right? TV's still working.

...Always more land to destroy with our awesome agricultural system, right? Don't get me wrong... what humans have achieved with food production is incredible, but forest and the trees right?

Unfortunately I think the ride's about to get very real my friends. Grow some fuckin' food.

I'm ranting, but who was the guy from the 1700s that predicted that we'd run out of food with our current population growth, that is until bio related sciences stepped in and extended harvest, yield, etc?

matrix2012's picture

well said tekhneek!

+1

 

"They" are killing the soil. "They" are culling the population.

This is probably the most important near term issue - which is why we highlight it on this website.  GMO "foods" have been engineered to be the pesticide or to withstand RoundUp Ready saturation.  In other words, when bugs bite the plant, the poison splits open their stomach and kills them.  Then you eat the "food" with no significant human testing based on the declaration of Michael R. Taylor - Monsanto’s former attorney, later their vice president, and now the US Food Safety Czar. -- www.weaponsofmassdebt.com

Michael Taylor Foods Safety search

https://startpage.com/do/search?q=Michael+Taylor+Foods+Safety

 

Learn more about GMOs

http://www.labelgmos.org/resources

 

Union of Concerned Scientists

Failure to Yield: Evaluating the Performance of Genetically Engineered Crops

http://www.ucsusa.org/food_and_agriculture/science_and_impacts/science/f...

 

The film “Percy Schmeiser: David versus Monsanto (2009),” about a Canadian farmer’s battle against Monsanto’s GMO canola seed, should be added to the movie resource list.

Check out his website: http://www.percyschmeiser.com/

 

Laurie's Food Blog

http://lauriesfoodblog.wordpress.com/

 

Genetically Modified crops

Maybe the best way to start this discussion and invite comments is ask you to watch this video:

Genetically Modified crops causing world wide concern (eco movie 2)

http://www.veoh.com/watch/v62763535BzaxhK9

A documentary about how the big chemical companies in the USA got to break the constitution and patent a living organism, patent LIFE, and now they have the monopoly of the so called agriculture.

No doubt there is some exaggeration but this is really scary. I will certainly avoid growing seeds from the USA that have been genetically altered.

More discussion: http://www.frankwoolf.com/forum/showthread.php?t=41

 

10 Facts Why GM Food is Bad - Jeffrey M. Smith (Institute for Responsible Technology)

http://www.healthylivingblog.net/?cat=25

 

post turtle saver's picture

We Texans are still grumbling over the yankee screw job that was done to the One True Dr. Pepper. The only thing preventing outright revolt is HEB's store brand colas. No HFCS, pure cane sugar and cheaper by far than the national brands.

Make mine a "Dr. B", please. And God's honest truth, the best root beer of any I've ever tried. That plus Blue Bell vanilla ice cream yields the Best Root Beer Float Ever(tm).

Dungeness's picture

High fructose corn syrup is highly addictive. About as addictive as cocaine. So, withdrawal symptoms could definitely cause some social unrest.

Rainman's picture

Fuck em, I ain't buying their inflation.....got a freezer full of fukishima fish.

LowProfile's picture

...And they double as a freezer light, which saves energy!  Go green!

Monedas's picture

Do they stay lit when you close the door ?

SemperFord's picture

Somebody has never had good corn bread!

Bennie Noakes's picture

I consider high-fructose corn syrup to be an essential nutrient!

Also, my automobile craves its gasoline laced with government-mandated ethanol.

agent default's picture

Fuck Yeah! Highly liquid assets.

slaughterer's picture

Ramadan started today:

Question: When is Ramadan 2012? Ramadan, the greatest religious observance in Islam, is an annual month of fasting. What are the dates for Ramadan in 2012? Answer: Ramadan is expected to begin on or around July 20, 2012 and will finish on or around August 19, 2012.

CrimsonAvenger's picture

A great window in which to start bombing the shit out of things, supposing you had four aircraft carriers hanging around somewhere.

neidermeyer's picture

Ramadan started just about 7 hours ago here on the east coast ,, they have already started celebrating in a theater in Colorado...

floyd084's picture

You understand how corn is not a usefull food much in the same way bernanke understands his monetary policy is good for the economy.

Monedas's picture

With a flip of your finger you have offended and marginalized the entire "Corn Syrup And Derivatives Consumer Nation" !          Monedas         1929         Comedy Jihad Never Underestimate The Importance Of Corn As A Stool Marker 

Stuck on Zero's picture

Watch Obama and the Liberal Democrats blame speculators.

 

donsluck's picture

You mean the Conservative Democrats. There is no liberal in the USA. And don't discount the Republicans. It was Nixon, a Republican, who instituted wage and price controls against the evil speculators.

Hmm...'s picture

Interesting.  Let me get this straight.

According to ZeroHedge posters:

-it's NOT ok to blame speculators and manipulation when it is rampant in the corn market. (driving price up).  it's just stupid liberals.

-but it IS ok to blame speculators and manipulation when it is rampant in the silver/gold market.  (driving price down). 

hmm...

that said: I personally blame

-Fed policy (ZIRP) that pushes speculators and "investors" into the commodity markets

-speculators/manipulators, especially the TBTF a-holes.

-terrible drought.

 

JohnG's picture

 

 

The price of corn is up due to supply constraints.  Speculators can and  do profit from this.

Metals should also be higher in price becuse of the same issue, supply, and manipulation controls that price down.

That said, your targets are equally valid.

Tijuana Donkey Show's picture

Demand for metals is elastic, while food is more static based on caloric needs for the population at large. Speculation on food is a no-brainer for the banker set, people gotta eat. A lack of corn would be a good thing for America, if you look at the C13/C14 makeup of most fat fucks in the USA, the flub is purely corn based. I think the equation for a nation of fat asses is something like:

(Food company profit drive*corn subsidy)*SNAP=Sickcare system for obesity

 

magpie's picture

At some point it will drive the government into bankruptcy faster than a rate hike or a lost war. If it starts tinkering with the subsidies later on, see Sudan for a current example.

Rainman's picture

quit eatin their stuff and price will come down to zero...it's magic

chump666's picture

Speculators you say.

Let me tell you something, the worst speculators you could have think of are (at this point) the EU, the ECB and or course the Fed and throw in some Chinese commie madness ala China is doing great.  And you have a flow over effect into markets, equities go bid, the USD sells.  The current equity rally has NOTHING to do with earnings, they have been sh*t, it has EVERYTHING to do with the most dangerous  man in charge of value/devaluing the USD = Ben Bernanke.  He has set off oil bid and hasn't bothered (he is arrogant ass-wipe) to check that India and China are both facing major hyper-inflated food prices (both India and China have been dumping their currencies on mass and buying USDs as an inflation hedge for months.)

As for traders speculating in commodities, well they are crowded markets usually held by a handful of players, that is correct.  But that is the market for you and the big players will offset USD weakness and pour into commodities, sans gold and silver.  Why?  Because the major flows are going into food commodities hedge funds will be watching the middle east/Africa/India and China for clues on droughts etc.  SO the food spike has just begun.  But as long as central banks are printing money like they are you'll see the crowded corn/wheat prices skyrocket.

The gold spike will occur once we go to war, but equities are capped as Asia won't allow total USD depreciation

THX 1178's picture

I think you mean the Leftist Socialist Communist Pinko Red Soviet Liberal Democrats.

Stuck on Zero's picture

Well ...  I did get you guys to thinking!

 

pcrs's picture

climate change? what a nonsense. Temperature was supposed to go up, increasing food production. It is just government running the productive people into the ground. Atlas Shrugged in reality.

People in the uk are freezing to death because of a global warming tax they can't pay.

Hmm...'s picture

It is just government running the productive people into the ground.

ignorant comment to say the least.

the worst drought in 60 years is government's fault?  Terrible corn yields that are dropping by the day is government's fault?  Inability to feed and water cattle due to drought is government's fault?

wake up.

Regardless if this is due to global climate change or not, we have a major ecologic disaster unfolding in real time across Amercia's breadbelt, not to mention other highly productive agricultural regions around the world. 

this last year I had to cut my grass in November, Decmeber, and March.  In MINNEAPOLIS.  We had almost no snow, and almost nothing stuck.  We've been having near record hot summer, and this is after near record hot spring and near record winter.  Who cares if it's global warming or not, it's HOT as hell, and the crops won't grow. 

Bobbyrib's picture

The country is already in the second Great Depression, we might be witnessing the second dust bowl in the making. History repeats itself.

Escapeclaws's picture

It's the sun becoming more active after its almost total lack of sunspot activity during this latest quiet cycle. Apparently, solar scientists are flumoxed by its current behavior. Predictions are that we can look forward to some massive solar flares coming our way with much concomitant heating of the atmosphere.

John_Coltrane's picture

Good points.  Readers should check the last issue of Scientific American regarding the issue of coronal mass ejection, CME, events occuring in this cycle.  The big effect wouldn't be an increase in temperature, it would be the flux of charged particles hitting and collapsing the earth's magnetic field and taking out all the transformers in the electrical grid due to induced high voltages.  (Too much magnetic induction can be bitch, though dynamos and electric motors depend on it)  Imagine the world without an elecrical grid (this includes the internet of course) for months while the transformers are replaced.  No cooling, refrigeration etc.

It also seems to me an important issue regarding monocultures, like corn, is suspectibility to genetic diseases and pests.  We are truly living on the edge of a knife with our unsustainable human population.

Pants McPants's picture

Two things bother me about the global warming crowd: first, the arrogance.  And second, the misguided belief that government is best equipped to 'solve' the problem.  

Not accusing you of either, just sharing my thoughts.

I'm in MLPS, too, and yeah, last winter was snow free....like the rest of the country.  I am, however, calling BS on November/December grass cutting.  And it seems you've forgotte about winter 2010 all too soon...

Flakmeister's picture

Well, when you are confronted by the same tired old arguments that have been shown to be wrong, you can get a little testy. Add in outright scientific fraud by a member of the Cato Institute at a Congressional hearing...

BTW, my only dog in the hunt is the science....

It is very clear that we will never have the will to actually address the problem, we are going to learn the hard way, i.e. by trial of fire....

Oh, I was golfing in NY in January,  twice.... Feb, too, March as well....

Monedas's picture

Scientific Socialism isn't scientific fraud .... it's just fraud .... period !

Disenchanted's picture

 

 

Ok Flakmeister we've already been down this road, but I think that the science today is being manipulated to show that the cause of climate change is mankind and it's technology. That is about another form of control and ways to profiteer from it. That is my problem with the whole current scenario.

 

I don't deny that climate change is happening, just those who insist that mankind is causing it. Climate change on planet earth is not a new thing involving mankind's use of carbon. Over six thousand years ago the earth warmed rapidly and melted the glaciers that covered a large land mass in North America. What caused that?

 

Or how about the Alpine glaciers? I found this:

 

The glaciers, according to the new hypothesis, have shrunk down to almost nothing at least ten times since the last ice age 10,000 years ago. "At the time of the Roman Empire, for example, the glacier tongue was about 300 meters higher than today," says Joerin. Indeed, Hannibal probably never saw a single big chunk of ice when he was crossing the Alps with his army.

from: http://www.spiegel.de/international/spiegel/the-coming-and-going-of-glac...

 

Now why on earth would it have been so warm back then, and at least "ten times?" I'm going to maintain my position that this current climate change is a natural cyclic process that earth has gone through many times. 

/s Clearly Ulrich Joerin the scientist mentioned in the Spiegel article hadn't got the memo from the IPCC yet, back in 2005... /s

 

Something else for you to consider:

 

IPCC Admits Its Past Reports Were Junk

July 16, 2012

 

excerpt:

The IAC reported that IPCC lead authors fail to give "due consideration ... to properly documented alternative views" (p. 20), fail to "provide detailed written responses to the most significant review issues identified by the Review Editors" (p. 21), and are not "consider[ing] review comments carefully and document[ing] their responses" (p. 22).  In plain English: the IPCC reports are not peer-reviewed.

Read more: http://www.americanthinker.com/2012/07/ipcc_admits_its_past_reports_were_junk.html#ixzz219mHPQgs

 

In case you don't agree with The American Thinker article's assessment you can read the 2010 IAC report for yourself here:

 

Climate Change Assessments, Review of the Processes & Procedures of the IPCC

http://reviewipcc.interacademycouncil.net/report.html

 

 

Flakmeister's picture

So you are saying that science is a deliberate fraud?

If that was the case then some real reasearch funded by the "other" side would be able to dispell it? I wonder why it has not happened, eh? So either the other "side" are liars or incompetent....

BTW, that Americanthinker article is written by a guy from the Heartland Inst...Hardly an objective source....

Finally, get the science correct, if  you call the warming at the end of the last Ice Age "fast", you have to call the current warming "hyperbolic"...

Yes, global warming and cooling occurs over long slow cycles... Whereas the past 200 years is not even a tick on the geological clock...

Look at the rates of change of C02 and temperature over the past 400,000 years in the Vostok ice core data and compare that to the current rates...

http://en.wikipedia.org/wiki/File:Carbon_Dioxide_400kyr.png

Could you remind us what was driving those Ice Age cycles? How strong were those climate forcings compared to this

http://www.esrl.noaa.gov/gmd/aggi/

Edit:

 

Here is a another goodie dealing with the recent Esper paper that the Daily Mail misrepresented:

For example, Moberg et al. (2005) created a Northern Hemisphere millennial temperature reconstruction without using any tree ring data, and it has among the smallest long-term cooling trends of all such reconstructions (just -0.06°C per millennium from 0 to 1900 AD, as opposed to the -0.31°C per millennium trend in Esper et al.).  The long-term annual Northern Hemisphere cooling trends in Ljungqvist et al. (2010) (-0.18°C per millennium from 0 to 1900 AD) and Mann et al. (2008) (-0.19°C per millennium from 300 to 1900 AD) are similar to but less than the summer northern latitude trend in Esper et al., as we would expect.

http://skepticalscience.com/esper-millennial-cooling-in-context.html

Note that the trends are  ~ -0.06 to -0.3 C per 1000 years, we are currently running at +0.16 per decade and have been for the past 30 years... 

http://iopscience.iop.org/1748-9326/6/4/044022 

DOT's picture

I have been looking at crop conditions in NE, IA, WI, IL, and MI the past two weeks.  Less than 15% of  what I saw was "good", mostly in central IL and presumably IN.  Some relief came yesterday for parts of WI and MI, but was not sufficient to raise any prospect for anything but reduced or non-existent (not fit for fodder) yields.  I am now back home in  WI and the mood is somber although the temp has dropped.

pcrs's picture

So you have bad wheather and this means climate change? We have a very cold summer at the moment here in this part of the world.

What kind of ignorance is it to think statistical information can be obtained from 1 season?