Printer Friendly

Water shortages driving global food prices even higher.

SINGAPORE: Developing economies will be 'hammered' as declining water supply adds to problems confronting farmers who are already struggling to meet food demand, pushing prices even higher, said CH2M Hill.

Countries in short supply of water including China will continue to boost food imports, draining resources in some of the largest agricultural producers including the United States and Brazil, said Lee McIntire, chairman and chief executive. The company provides services from treating waste water and building irrigation systems to cleaning up nuclear sites.

Food costs tracked by the United Nations advanced in June for the tenth time in the past 12 months, staying near a record on higher sugar, dairy and rice prices, while meat reached an all-time high. The World Bank estimates higher food expenses have pushed 44 million more people into poverty. "Food prices are going to go up," McIntire said, without giving a timeframe. "The countries that are trying to grow their economy, I think they're going to be hammered more and more. They're going to be short of water."

Food as water

The closely held company, based in Englewood, Colorado, provides planning, financing, construction, operations and maintenance services. The firm had gross revenue of $6.3 billion last year and helps provide irrigation in the US.

"Global food production is not keeping up with demand," Fred Neumann, co-head of Asian economic research at HSBC Holdings, said in an interview from Hong Kong. "Countries such as China have seen droughts over many years. Now we see other parts of the world facing some water shortages, which is starting to impact the global price of certain goods."

The US corn-belt is among the areas in the US with the most 'virtual-water' exports, as they ship food products that use a lot of water to grow, according to a study published by the Proceedings of the National Academy of Sciences in December.

Five US states made up 62 per cent of the corn harvest last year and 55 per cent of the soybean crop in a nation that supplies almost half of the global trade, according to USDA data.

"There's a connection between energy, water and food," said 62 year-old McIntire in an interview in Singapore July 5. "It's very hard to ship water. The best way to export water is through food." It takes about 900 litres of water to produce a kilogramme of corn, and double that amount for a kilogramme of soybeans, according to the Water Footprint Network website.

Desperate measures

China, the world's biggest importer of soybeans, bought 24 million tonnes of the 37.97 million tonnes shipped by the United States from September 1 through June 23, according to USDA data. "How do they get water to China Soybeans," McIntire said.

"You could see a lot of investments by the Chinese, buying land to grow soybeans so they can ship water," he said, referring to investments in countries including Brazil. - Bloomberg News

The Asian nation, home to about a fifth of the global population, has only 6 per cent of the freshwater, according to the United Nations Food & Agriculture Organisation website.

Global stockpiles of corn, the most-consumed grain, are forecast to drop to 47 days of use, the fewest since 1974, data from the USDA show. Inventories are declining as demand continues to outstrip production that's forecast to rise to a record for a fifth consecutive year.

The proportion of the US corn harvest going to ethanol has almost quadrupled since 2002 and will reach 40 per cent in the current marketing year, according to USDA data. Ethanol output has increased more than six-fold since 2002, boosted by federal renewable fuel standards and subsidies now being scrutinized by Congress.

"Water shortages are a problem that we're going to face for years to come," Tetsu Emori, a commodity fund manager at Astmax Co., said from Tokyo yesterday.

Muscat Press and Publishing House SAOC 2011

Provided by an company
COPYRIGHT 2011 Al Bawaba (Middle East) Ltd.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2011 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Times of Oman (Muscat, Oman)
Geographic Code:9CHIN
Date:Jul 9, 2011
Previous Article:Shipping, port sectors gather steam.
Next Article:BMW's first half sales up 13 per cent in Middle East.

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters