Are We Still Seeing A Food Price Spike Or Something Else?

When I started posting about the most recent spike in global food prices (January 2011), I never expected to still be talking about high prices 12 months later (see graph above).  A "spike" is supposed to go up and then down.  The current "spike" isn't doing that very well.  Yesterday, the UN Food and Agriculture Organization posted their monthly update  (FAO Food Price Index).   This index reflects the prices that buyers experience in international trade.  Consumers in import-dependent countries experience these sorts of prices, while consumers in "bread basket" countries like the US see much more modest price swings.  Those who are most effected by this phenomenon are not getting much of a break.

What Is Different About This Price "Spike"?

The food price spike of 2007-9 (peak 2008) was unprecedented at the time as prices had been rising moderately with minor swings for decades.  That spike came to an abrupt end by 2009, but then returned in mid 2010.  This new spike is different from the first in many ways, but by looking at three-year windows (see graph below), the difference becomes more apparent.



The "baseline" index has been climbing slowly, and until this last three year cycle, the gain was on the order of 20 index points.  Unless there is a dramatic change in trend, the "down side" of the most recent spike appears to represent something more like a 40-60 index point gain.

The Cereal Index Is A Little More Encouraging

Spurred by high commodity prices, farmers around the world have been increasing plantings of some crops and intensifying their production of others.  When not frustrated by extreme weather events, they have been able to increase overall supplies.  In the graph below we see that although the cereal price index has not declined as rapidly as it did in 2008/9, it may return to a level not too far above the previous low.  The other indices for milk, sugar, oils, dairy and particularly for meat still show very limited retreats (all these graphs on SCRIBD)

What Is Next?

If the previous pattern holds, we might expect to see the beginnings of another spike around June of this year.  There are some reasons to think that may not occur.  The continued struggles in the EU economy may dampen prices as that region is a major importer of many commodities.  The end of subsidies and tariffs for corn-based ethanol in the US might reduce overall grain demand.  The gridlock of US governance will probably only intensify as the election approaches, and that could keep the economic recovery anemic.  That would in turn have a negative effect on commodity prices.

The Climate Change Wild-Card

On the other hand, we can't predict what weather will do to global food production this year.  This brings me back to the topic of my original post in this series.  At that time I expressed concern about the evidence of a second major spike in food prices.  I was also encouraged by the news that long-awaited drought tolerance traits were finally becoming commercially available, particularly for corn.   Two companies introduced drought tolerant corn hybrids in 2011 which were developed through conventional breeding methods speeded up with biotechnology testing capabilities (Marker Assisted Selection).  These included Pioneer Hi-Bred (part of DuPont), and Syngenta. Monsanto and BASF cooperated to develop a GMO drought tolerant corn.  It will be in large scale field tests in the 2012 season.  It will probably take several years before farmers can sort out when and where these traits will make the most difference. Fortunately, there is also a major project underway to develop drought tolerant corn (maize) for Africa.

We are really in uncharted territory when it comes to the future of the global food supply.  Fortunately, there continues to be a major private/public effort to make the advances - small and large - that will increase our chances of keeping up with the challenge.

Graphs by Steve Savage based on the FAO data. Additional graphs available for the other elements of the food index. Please feel free to comment here or to email me at savage.sd@gmail.com. 

What's Happening With The US Fruit And Vegetable Supply?

(This post appeared on Sustainablog on 1/3/12)
At first glance there has been an unsettling trend in the supply of fruit and vegetables in the US (see graph above).  We seem to be reversing some of the consumption gains that public health experts would see as important - even critical.  The USDA Economic Research Service tracks the farm-level supply of many commodities and expresses it relative to the population of the country.  Overall, this data set appears to indicate a decline in per capita fruit and vegetable supplies from a peak in the late 1990s ( Note: these numbers are not a direct measure of how much fruit and vegetables a typical American consumes because there is some loss along the commercial chain and also in the consumer's home).  Most public health and nutrition experts would say that it would be better if Americans ate even more fruit and vegetables because of their value in addressing obesity, cancer and other health concerns.  How does that goal reconcile with these recent supply statistics? Fortunately, a closer look at the details reveals a more nuanced situation in which our US produce supply is getting:

• slightly smaller
• fresher
• more diverse, and
• increasingly imported.

Getting Fresher

From the graph below we see that most of the decline in the produce supply has been in processed categories.  There has been a decrease of about 25 pounds per person in processed vegetables (canned and frozen).   However, since the middle of the last decade there has also been a drop of more than 10 pounds per person in the supply of fresh vegetables. The 30 pound per person drop in processed fruit consumption is mainly due to a 15 pound per person drop in orange juice along with declines in canned and dried fruit.

Vegetable Options Are Becoming More Diverse

Of the fresh vegetables that USDA-ERS tracks (see table below),  there have been "winners" and "losers" comparing the period 1997-1999 with the period 2007-2009.  Traditional high consumption vegetables like carrots, head lettuce, and potatoes saw the largest decline in terms of pounds and on a percentage basis.  Eighteen tracked vegetables had an increasing supply over the same time period with romaine lettuce, onions and peppers being the largest on a weight basis and spinach, okra and asparagus showing the largest gains on a percentage basis.

Fruit Options Are Becoming More Diverse

Looking at the same time period, the fruit supply has also shifted towards greater diversity (see table below).  On a weight basis, the big winners have been avocados, pineapples and strawberries, but 10 fruits have seen more than a 25% increase and 5 fruits have increased more than 100%.  The biggest supply declines are for oranges, bananas, grapefruit and apples - again, traditional "main stays."  The gains are for more exotic options.


Overall, the fruit and vegetable supply is growing in crops that supply a diverse collection of desirable phytochemicals with positive health associations.  This is probably the most encouraging trend in recent years.  Not surprisingly, most of the big "winners" have been crops that are delivered with reliable taste quality.

Fruits and Vegetables Are Increasingly Imported

In 1960, very few vegetables were imported to the US; but since that time there has been a slow but steady increase in imports so that by 2009 they represented ~21% of the total (see chart below).  Per capita domestic production of vegetables had risen significantly in the 1980s, but leveled off during the 1990s.  Since around 2004, domestic vegetable production has declined ~30 lbs per person.   The most significant growth in vegetable imports since 1990 has been for artichokes, asparagus, brussels sprouts, garlic, cucumbers, peppers, eggplants, squash and tomatoes. By 2009, more than 40% of all these crops were imported.  Even crops which were not often imported in 1990 (carrots, mushrooms, broccoli), now have more than 10% imports. (Crop-by-crop trend lines can be found on SCRIBD)

In the early 1970s, only about 25% of all US fruit was imported.  Since then, there has been a steadily increasing trend in imports. Nearly 50% of US fruit was imported by 2009.  Since 1990, pineapples and limes have gone from ~55% US grown to 100% imported.  Papaya imports have increased from 25% to 95%. Kiwifruit imports have grown from 55% to 80%.  Avocados have risen from 10% to 70% imports and grapes from 35% to 50%.  Smaller increases have also been seen for tangerines, cantaloupe, and lemons.  Even strawberries are approaching 10% imports. (Crop-by-Crop trend lines can be found on SCRIBD)

Why The Rise In Imports?

There are probably several reasons for the increasing role of imports in the US fresh fruit and vegetable supply which vary by crop.  First, many popular fruits can only be grown in tropical or semi-tropical climates.  Such environments are limited in the US and those that exist are often under urbanization pressure (CA, FL, HI).  Secondly, many produce crops are labor intensive to produce.  Since the US does not currently have a workable guest worker system, it is more practical to import crops from regions with a more adequate or predictable source of labor.  Thirdly, there is an on-going trend towards "protected culture" for high value crops (greenhouses, shade houses, rain shields...).  Canada and Mexico have been major innovators in that area and their highly productive systems have become important for many crops.   Fourth, American consumers have come to expect year around supplies of popular produce items, and this requires sourcing from different regions at different times of year.  Finally, as US population has grown and fruit and vegetable consumption has increased, it is increasingly difficult to find enough suitable farmlandin terms of climate and water availability.

Can We Pursue Both Sustainability and Healthy Eating?

Most health professionals would favor substantially higher per capita produce consumption than we see today.  Imports are a major means by which such goals are likely to be achieved.  Some observers will be concerned that the increasing import trend is problematic because of "food miles."  Whether the energy or greenhouse gas "footprint" of imported crops is high depends a great deal on the basic productivity by region and also depends on the means of shipping.  In any case, it is impractical to locally produce the quantity and diversity of fruits and vegetables that Americans have proven willing to consume, let alone a higher goal.  If we wish to harmonize our national goals for both "sustainability" and "public health,"  the best strategies will include components such as:

• A rational, agricultural guest worker system to preserve our domestic production
• Continued development of "protected culture" for land, water and labor efficiency
• The local and/or multi-regional production of crops where that is practical (e.g. blueberries, sweet corn...)
• The use of preservation methods such as freezing for crops where taste and nutritional profiles are positive in that form
• Continued improvements in waste reduction in the production and distribution system
• Finding purchasing/contracting regimes to make "in season" economics mutually beneficial for growers, the value chain, and the consumer
• Continued improvement of the consumption experience at the consumer level to avoid "disappointment shrink"
• Use of highly efficient, long-distance shipping methods (e.g. ocean freight) where possible

Graphs by Steve Savage based on USDA-ERS data.  A more extensive set of graphs is available for download on SCRIBD.  My email is savage.sd@gmail.com.