Creating a food shortage

Washington Post:

The globe's worst food crisis in a generation emerged as a blip on the big boards and computer screens of America's great grain exchanges. At first, it seemed like little more than a bout of bad weather.

In Chicago, Minneapolis and Kansas City, traders watched from the pits early last summer as wheat prices spiked amid mediocre harvests in the United States and Europe and signs of prolonged drought in Australia. But within a few weeks, the traders discerned an ominous snowball effect -- one that would eventually bring down a prime minister in Haiti, make more children in Mauritania go to bed hungry, even cause American executives at Sam's Club to restrict sales of large bags of rice.

As prices rose, major grain producers including Argentina and Ukraine, battling inflation caused in part by soaring oil bills, were moving to bar exports on a range of crops to control costs at home. It meant less supply on world markets even as global demand entered a fundamentally new phase. Already, corn prices had been climbing for months on the back of booming government-subsidized ethanol programs. Soybeans were facing pressure from surging demand in China. But as supplies in the pipelines of global trade shrank, prices for corn, soybeans, wheat, oats, rice and other grains began shooting through the roof.

At the same time, food was becoming the new gold. Investors fleeing Wall Street's mortgage-related strife plowed hundreds of millions of dollars into grain futures, driving prices up even more. By Christmas, a global panic was building. With fewer places to turn, and tempted by the weaker dollar, nations staged a run on the American wheat harvest.

Foreign buyers, who typically seek to purchase one or two months' supply of wheat at a time, suddenly began to stockpile. They put in orders on U.S. grain exchanges two to three times larger than normal as food riots began to erupt worldwide. This led major domestic U.S. mills to jump into the fray with their own massive orders, fearing that there would soon be no wheat left at any price.

"Japan, the Philippines, [South] Korea, Taiwan -- they all came in with huge orders, and no matter how high prices go, they keep on buying," said Jeff Voge, chairman of the Kansas City Board of Trade and also an independent trader. Grains have surged so high, he said, that some traders are walking off the floor for weeks at a time, unable to handle the stress.

"We have never seen anything like this before," Voge said. "Prices are going up more in one day than they have during entire years in the past. But no matter the price, there always seems to be a buyer. . . . This isn't just any commodity. It is food, and people need to eat."

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This article reads like a science fiction disaster novel. It left out some of the players. when it comes to creating a food shortage no one living today can compete with Robert Mugabe of Zimbabwe who converted that country from the bread basket of Africa into a basket case. He did through turning away from the market economy and gave farms taken from productive owners to unproductive political associates. As the shortages began to appear he dictated prices in an attempt to veto the laws of supply and demand.

His imitators in South America followed the same failed plan. Chavez in Venezuela and the Kirchners in Argentina also attempted to veto the laws of supply and demand creating shortages that further exacerbated the problem. Argentina's export taxes caused a farmer revolt which further reduced world supplies. Liberals in the US and the EU reduced the supply of corn in the food chain by mandating its use in the fuel supply which they have restricted by not allowing drilling in parts of the US and offshore waters. Mexico has also made it difficult to add to the fuel supply because of policies that prohibit out side investment in the hunt for oil.

The fact is that restrictions on trade and investments are the problem. All of these are caused by liberal control freak policies that are driving up prices on what would otherwise be in abundant supply. We are paying the price for Democrat policies to starve this country of energy in more than just higher energy cost. If we elect Democrats this fall, the situation will get worse.