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Food Outlook 2009 - Understanding the Risks

Sunday, May 24, 2009, 8:36 PM
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Sunday, May 24, 2009

Executive Summary

  • Global grain stocks at lowest levels in over four decades
  • Shockingly low fertilizer sales suggest possibility of a disappointing yield
  • Food supply and demand are tightly balanced
  • Food distribution networks are cost-efficient but not terribly robust
  • Ways you can increase your food security

Introduction

Food is something that many of us take for granted, but it is important to recognize that this luxury is a recent development in human history. It is time to give more thought to this critical staple in our lives.

In March of 2008, food commodity prices hit an all-time high. This coincided with a world-wide food crisis, food riots, and even a few instances of national rice hoarding. Many believe that this was triggered by economic conditions (e.g. a flood of cheap money), not a fundamental or structural shortfall in food production. But I hold the view that both were at fault.

Food demand has grown steadily over the years, as has food supply. However, in recent years the excess margin of supply over demand has tightened and even gone negative several times. Reserve stocks are incredibly tight, resting at levels not seen since the early 1970's. 

It is easily conceivable that food deliveries could be disrupted within any country, leading to rapid onset of local food shortages. This report will apprise you of several of the challenges that currently exist regarding world food supplies and the possibility that these challenges could lead to a structural shortfall in global food supplies in 2009 or 2010. It also contains specific actions that could greatly enhance your own food security.

 

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