This is a big story. Wal-Mart has started to ration the amount of rice that people  can buy. Apparently this is the first time food rationing has happened in the US.

People don’t like the mention of the word “rationing”. It brings back dark memories, constructed or real’ of war economies and ration books. In our new world of credit on tap (or should I say old new world) we just have what we want when we want. The idea of not being able to do that is surely a restrction on our freedoms.

Well no it isn’t. The credit bubble that we’ve lived in post financial deregulation has lulled us in a false sense of entitlement and desire.  Hark back to the days where we had to save up for stuff or couldn’t actually buy things because we didn’t have the cash.

Those who have read my climate change paper will know it is based on establishing global quotas for fossil fuel production.  We have been living way beyond the ecosystems capacity to provide for us and the rise in food prices is a signal that we have a major problem.

This rationing which has been followed by Israel and no doubt other countries shortly.

Right then I’m off to the supermarket.

Suddenly food is top of the global humanitarian agenda. Policymakers now realise something major has to be done after 7 years of feast lest 7 years of famine take hold.

Whether its due to bio-fuels or falling farm output, the situation is the same. People cannot afford to buy food.

It’s interesting that in the drive to grow manufacturing and service industries, agriculture has been relegated to a has been and rather dull business. But as we know we all need our daily bread and this rather sharp reminder will see farming regain its importance as a primary and important piece of industry.

This may even be the straw that breaks the back of farming subsidies.  But we may be facing a period of high food prices with the embedded cost of oil at every place in the supply chain.

If there’s an answer its to eliminate subsidies (this from 5 years ago)and start to grow food locally as much as possible.

Time to bring back the veggie patch.

A week of food riots has seen the Haitian Prime Minister fired by the Senate. Food is right up there on the National Security watch list along with climate change, peak oil and water. This has been simmering for a while now but is starting to loom as a serious global problem.

It’s not a problem that can be considered in isolation. Speculation in land (financial asset bubble), population growth, the bio-fuel issue and climate change have all contributed to a serious problem with the food chain.

Rising oil prices have just been the icing on this unpalatable cake. Is this likely to be contained to developing or poorer nations? Not so say some. In developed nations just-in-time delivery and stocking systems work on very tight margins. Food banks are under serious strain with a whole new layer of users appearing in recent times.

There’s no simple solution to this situation but governments need to take it very seriously.

With rising food prices starting to kick in globally the specter of food fights is becoming a reality (hat tip to Nevil).

Riots have been seen in many countries now and food, like climate change, is starting to be seen as a national security issue.  The Philipines is facing major rice shortages which is almost unthinkable for a country where rice is a staple. It is also causing serious unrest.

Even here in New Zealand consumers are unhappy about paying 60% more for a block of cheese which has been produced down the road.

Its a difficult situation that will take some sorting out. Producers want the best prices they can get and so will sell into the international market. Subsidies continue to distort the market.

World Bank President, Robert Zoellick has suggested a move away from direct aid and an attempt to remove barriers, create local markets and improve local production.

About time! That’s what i like about Kiva which promotes empowerment and local solutions. That is the way forward. Forget about the huge projects of the 1970s and 80s which dropped so many developing nations into the debt trap. Create a level playing field and encourage local solutions.

I’ve mentioned Agflation previously and we’re starting to see more concern expressed at the official level. The UK Government’s Chief Scientific Adviser, Professor John Beddington, has weighed into the debate calling food shortages a problem that was as immediate as climate change. The driver of agflation is two fold: increased demand driven by population growth and increasing development and supply shortages caused by deforestation to grow biofuels.

These two drivers are causing major price rises in all food groups. This creates what might be called “real” inflation, a price rise in the cost of real goods as opposed to asset inflation which is more of a monetary phenomenon.

This is a real problem because it can’t be solved by the hammer of monetary policy though the myopists in their central bank ivory towers seem to think so.

I can imagine their conversation: “let’s raise interest rates so people eat less”.

In many countries people are exhorted to have more children especially in developed economies where birth rates among the middle classes have fallen. So how can we stop the population expanding and how are we going to feed all these people and do it in a manner than the ecosystem can cope with.

It’s a tricky question. One could argue that food shortages, famine, disease and natural disasters regulate populations. That may still be the case. But can we rely on that and should we given we are more enlightened, well supposedly.

Population growth was for a long time a favourite topic for policymakers but has only recently come back onto the mainstream agenda. There is no doubt that the growth in biofuels has played a major part in this and that governments who have set targets for biofuel supply may well need to go back and think more carefully about how the unintended consequences of this feel good policy will play out.

Back in January the Indy ran a story on the life and times of battery farmed chickens. As you might expect it didn’t make pleasant reading.

Now following the campaign against battery chickens The Independent reports an complete sell out of free range chickens in the UK.

Figures suggest that in 2007 the sale of battery farmed chickens fell by alomst 10 million birds whilst consumers bought 4.4 million more free range.

This is the consumer voting with their wallets and this is how it should be: a change in individual consciousness.

It’s also interesting the overall sales fell by nearly 5% suggesting that some consumers turned away from chicken altogether.  Again this is an outcome of raised awareness.

It just demonstrates what can be done when the consumer shifts.