The food chain

Iowa has suffered exceptionally heavy rainfall these last few weeks. Shas will do well in the upcoming Israeli general election.

Not only are the two preceding statements NOT random, they are directly connected by a chain of cause and effect. So try and remember — when the fatuous talking heads on the TV post-election all-night coverage express their amazement at Shas’ strong showing , and the Shas spokesmen wax lyrical about the help of the Almighty and the unique status of Rabbi Ovadia Yosef — to think of the yeomen farmers of Iowa and reflect that the ways of the Lord are passin’ strange.

The chain begins in the American Midwest, where the corn grows high as an elephant’s eye…in a good year. This ain’t no good year, this is shapin’ up to be a mighty bad year. “Heavy rains in the US Midwest have flooded farmland and cut yields,” Bloomberg reported on June 12. “US corn production may drop by 10% from last year and inventories may decline to a 13-year low before the harvest next year, the US Dept. of Agriculture said June 10.”

Heavy rains do happen and not every year sees a bumper harvest. But this latest blow, which has set back plantings and ruined an as-yet-unknown percentage of what has already been planted, finds the corn market very stretched. So, although the rains have sent corn prices soaring to all-time highs six days running, reaching levels well above $7 a bushel, the latest rise of 20+% in the last two weeks caps an 80+% rise in the past year – and an even greater rise if you go further back.

But don’t blame the weather for that. Blame Al Gore for converting college-educated, secular Americans to his new religion of Global Warming. And blame George Bush for the insanity of subsidizing the production of ethanol from corn – although the cost of doing so is negative in both economic (costs more than extracting oil or natural gas) and ecological (generates more pollution) terms. However, logic doesn’t help when Americans get religion, so we have seen the production of ethanol soar. Farmers, who are far more rational than city slickers, responded quickly to the incentive to produce more corn – by switching fields from other crops.

That’s only the supply side of the story, and only the American part of it. The demand side centres on those pesky Asians – Chinese, Indians, etc. – who are moving from poverty to petit bourgeois status by the tens of millions. Funnily enough, these people now want to eat more and better. Demand for all kinds of grain is therefore soaring, but supply is being hit by the vagaries of the weather (from drought in Australia to floods in the Midwest) and the lunacy of corn-based ethanol.

These, then, are the building blocks of the global food crisis – which is in addition to and largely separate from the global energy crisis and, especially, the global credit crisis. One key difference is that the food crisis impacts the poor disproportionately, because they spend a much larger share of their total income on food. Consequently, whilst the rich world will be incommoded by the rise in food prices, because people will have to cut their consumption of no-essentials, the poor world will suffer a massive drop in its already meager standard of living.

Even within rich countries, the lower-income groups will be hammered, in absolute terms and relative to their higher-income compatriots. Since most rich countries are democratic, the upsurge of dissent among the lower-income groups will find expression in the rise, or growth of, political parties that represent them. In the Israeli context, the party best placed to benefit from this new tide is Shas – and, to a lesser extent, UTJ and the Arab parties. Shas will clean up among ex- or would-be Likud voters, by highlighting Netanyahu’s Thatcherist beliefs and policies and it will hoover up religious Sephardim who have nothing to look for in the territorially-obsessed parties of the religious right.

For many people in Israel, an election result in which Shas gets as many or more seats than, say, Labour, and/or than the entire national-religious right, would be a national disaster. But people of a more balanced disposition should look past that and watch out for what would be a truly horrendous outcome developing from the global food crisis: the intensification of food riots in Egypt, to the point where they endanger the current regime and open the way to a possible seizure of power by the Moslem Brotherhood.

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