"More food facts from NYTimes
Keith Bradsher January 19, 2008

KUANTAN, Malaysia — Rising prices for cooking oil are forcing
residents of Asia’s largest slum, in Mumbai, India, to ration every
drop. Bakeries in the United States are fretting over higher
shortening costs. And here in Malaysia, brand-new factories built to
convert vegetable oil into diesel sit idle, their owners unable to
afford the raw material.

This is the other oil shock. From India to Indiana, shortages and
soaring prices for palm oil, soybean oil and many other types of
vegetable oils are the latest, most striking example of a developing
global problem: costly food.

The food price index of the Food and Agriculture Organization of the
United Nations, based on export prices for 60 internationally traded
foodstuffs, climbed 37 percent last year. That was on top of a 14
percent increase in 2006, and the trend has accelerated this winter.
In some poor countries, desperation is taking hold. Just in the last
week, protests have erupted in Pakistan over wheat shortages, and in
Indonesia over soybean shortages. Egypt has banned rice exports to
keep food at home, and China has put price controls on cooking oil,
grain, meat, milk and eggs.

According to the F.A.O., food riots have erupted in recent months in
Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen.

“The urban poor, the rural landless and small and marginal farmers
stand to lose,” said He Changchui, the agency’s chief representative
for Asia and the Pacific.

A startling change is unfolding in the world’s food markets. Soaring
fuel prices have altered the equation for growing food and
transporting it across the globe. Huge demand for biofuels has
created tension between using land to produce fuel and using it for

A growing middle class in the developing world is demand! ing more
protein, from pork and hamburgers to chicken and ice cream. And all
this is happening even as global climate change may be starting to
make it harder to grow food in some of the places best equipped to do
so, like Australia.

In the last few years, world demand for crops and meat has been
rising sharply. It remains an open question how and when the supply
will catch up. For the foreseeable future, that probably means higher
prices at the grocery store and fatter paychecks for farmers of major
crops like corn, wheat and soybeans.

There may be worse inflation to come. Food experts say steep
increases in commodity prices have not fully made their way to street
stalls in the developing world or supermarkets in the West.

Governments in many poor countries have tried to respond by stepping
up food subsidies, imposing or tightening price controls, restricting
exports and cutting food import duties.

These temporary measures are already breaking down. Across South! east
Asia, for example, families have been hoarding palm oil. Smugglers
have been bidding up prices as they move the oil from more subsidized
markets, like Malaysia’s, to less subsidized markets, like Singapore’s.

No category of food prices has risen as quickly this winter as so-
called edible oils — with sometimes tragic results. When a Carrefour
store in Chongqing, China, announced a limited-time cooking oil
promotion in November, a stampede of would-be buyers left 3 people
dead and 31 injured.

Cooking oil may seem a trifling expense in the West. But in the
developing world, cooking oil is an important source of calories and
represents one of the biggest cash outlays for poor families, which
grow much of their own food but have to buy oil in which to cook it.

Few crops illustrate the emerging problems in the global food chain
as well as palm oil, a vital commodity in much of the world and
particularly Asia. Fr! om jungles and street markets in Southeast Asia
to foo d companies in the United States and biodiesel factories in
Europe, soaring prices for the oil are drawing environmentalists,
energy companies, consumers, indigenous peoples and governments into
acrimonious disputes.

The oil palm is a stout-trunked tree with a spray of frilly fronds at
the top that make it look like an enormous sea anemone. The trees,
with their distinctive, star-like patterns of leaves, cover an eighth
of the entire land area of Malaysia and even greater acreage in
nearby Indonesia.

An Efficient Producer

The palm is a highly efficient producer of vegetable oil, squeezed
from the tree’s thick bunches of plum-size bright red fruit. An acre
of oil palms yields as much oil as eight acres of soybeans, the main
rival for oil palms; rapeseed, used to make canola oil, is a distant
third. Among major crops, only sugar cane comes close to rivaling oil
palms in calories of human food per acre.

Palm ! oil prices have jumped nearly 70 percent in the last year
because supply has grown slowly while demand has soared.

Farmers and plantation companies are responding to the higher prices,
clearing hundreds of thousands of acres of tropical forest to replant
with rows of oil palms. But an oil palm takes eight years to reach
full production. A drought last year in Indonesia and flooding in
Peninsular Malaysia helped constrain supply. Worldwide palm oil
output climbed just 2.7 percent last year, to 42.1 million tons.

At the same time, palm oil demand is growing steeply for a variety of
reasons around the globe. They include shifting decisions among
farmers about what to plant, rising consumer demand in China and
India for edible oils, and Western subsidies for biofuel production.

American farmers have been planting more corn and less soy because
demand for corn-based ethanol has pushed up corn prices. American
soybean acr! eage plunged 19 percent last year, producing a drop in
soybean oil output and inventories.

Chinese farmers also cut back soybean acreage last year, as urban
sprawl covered prime farmland and the Chinese government provided
more incentives for grain.

Yet people in China are also consuming more oils. China not only was
the world’s biggest palm oil importer last year, holding steady at
5.2 million tons in the first 11 months of the year, but it also
doubled its soybean oil imports to 2.9 million tons, forcing buyers
elsewhere to switch to palm oil.

Concerns about nutrition used to hurt palm oil sales, but they are
now starting to help. The oil was long regarded in the West as
unhealthy, but it has become an attractive option to replace the
chemically altered fats known as trans fats, which have lately come
to be seen as the least healthy of all fats.

New York City banned trans fats in frying at food service
establishments last summer and will ban them in bakery good! s this
summer. Across the country, manufacturers are trying to replace trans
fats. American palm oil imports nearly doubled in the first 11 months
of last year, rising by 200,000 tons.

“Four years ago, when this whole no-trans issue started, we processed
no palm here," said Mark Weyland, a United States product manager for
Loders Croklaan, a Dutch company that supplies palm oil. “Now it’s
our biggest seller.”

Last year, conversion of palm oil into fuel was a fast-growing source
of demand, but in recent weeks, rising prices have thrown that
business into turmoil.

Here on Malaysia’s eastern shore, a series of 45-foot-high green and
gray storage tanks connect to a labyrinth of yellow and silver pipes.
The gleaming new refinery has the capacity to turn 116,000 tons a
year of palm oil into 110,000 tons of a fuel called biodiesel, as
well as valuable byproducts like glycerin. Mission Biofuels, an
Australian compan! y, finished the refinery last month and is working
on an even larger factory next door at the base of a jungle hillside.

But prices have spiked so much that the company cannot cover all its
costs and has idled the finished refinery while looking for a new
strategy, such as asking a biodiesel buyer to pay a price linked to
palm oil costs, and someday switching from palm oil to jatropha, a
roadside weed.

“We took a view that palm oil prices were already high; we didn’t
think they could go even higher, and then they did,” said Nathan
Mahalingam, the company’s managing director.

Growth in Biofuels

Biofuels accounted for almost half the increase in worldwide demand
for vegetable oils last year, and represented 7 percent of total
consumption of the oils, according to Oil World, a forecasting
service in Hamburg, Germany.

The growth of biodiesel, which can be mixed with regular diesel, has
been controversial, not only because it competes with food uses of
oil but ! also because of environmental concerns. European conservation
groups have been warning that tropical forests are being leveled to
make way for oil palm plantations, destroying habitat for orangutans
and Sumatran rhinoceroses while also releasing greenhouse gases.

The European Union has moved to restrict imports of palm oil grown in
unsustainable ways. The measure has incensed the Malaysian palm oil
industry, which had plunged into biofuel production in part to
satisfy European demand.

Another controversy involves the treatment of indigenous peoples
whose lands have been seized by oil plantations. This has been a
particular issue on Borneo.

Anne B. Lasimbang, executive director of the Pacos Trust in the
Malaysian state of Sabah in northern Borneo, said that while some
indigenous people had benefited from selling palm oil that they grow
themselves, many had lost ancestral lands with little to show for it,
includin! g lands that used to provide habitats for endangered orang utans.

“Finally, some of the pressures internationally have trickled down.
Some of the companies are more open to dialogue; they want to talk to
communities,” said Ms. Lasimbang, a member of the Dusun indigenous
group. “On our side, we are still suspicious.”

Demand Outstrips Supply

As the multiple conflicts and economic pressures associated with palm
oil play out in the global economy, the bottom line seems to be that
the world wants more of the oil than it can get.

Even in Malaysia, the center of the global palm oil industry for half
a century, spot shortages have cropped up. Recently, as wholesale
prices soared, cooking oil refiners complained of inadequate
subsidies and cut back production of household oil, sold at low,
regulated prices.

Street vendors in the capital, Kuala Lumpur, complain that they
cannot find enough cooking oil to prepare roti canai, the flatbread
that is the national snack. “It’s! very difficult; it’s hard to find,”
said one vendor who gave only his first name, Palani, after admitting
that he was secretly buying cooking oil intended for households
instead of paying the much higher price for commercial use.

Many of the hardest-hit victims of rising food prices are in the vast
slums that surround cities in poorer Asian nations. The Kawle family
in Mumbai’s sprawling Dharavi slum, a household of nine with just one
member working as a laborer for $60 a month, is coping with recent
price increases for palm oil.

The family has responded by eating fish once a week instead of twice,
seldom cooking vegetables and cutting its monthly rice consumption.
Next to go will be the weekly smidgen of lamb.

“If the prices go up again,” said Janaron Kawle, the family
patriarch, “we’ll cut the mutton to twice a month and use less oil.”


On Jan 19, 2008, at 12:39 AM, hamlet_jones wrote:

January 18, 2008

Information Provided by General Mills Bakery Flour

www.gmflour.com & www.pillsburybakery.com

Flour Facts

Weekly Market Highlights

* Wheat Futures prices soared this week, with Minneapolis leading
the way, gaining more than $1.30 per bushel in one week.
* Last Friday's U.S.D.A. winter wheat seeding estimate, lower than
last year, violently shocked the market.
* Most wish the U.S.D.A. would double-check their math; however,
the market has no choice but to react to the stunning drop in planted
acres with higher prices.
* Durum wheat, used to produce Semolina, rose to $21.50 per bushel
this week.
* 2008 is off to a roaring start, even after we watched wheat
prices nearly double in 2007.


Jack Alpert (Bio)     mail to: Alpert@skil.org       www.skil.org      Other position papers

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