Post by Theta Sigma on Sept 2, 2007 8:43:23 GMT -5
It occurs to me that humanity is being rapidly divided into two distinct classes: the truly needy, and the truly greedy! Please excuse the length of this post, but these articles are well worth reading in order to gain some perspective on the pathocratic priorities that govern human society in the 21st Century.
Although executives in the UK aren't doing too badly at all:
Talk about "creating your own reality"! And when you're next counting your pennies to try and keep your children fed, you might want to remember the following:
CEO pay and benefits on the rise: report
By Joanne Morrison
WASHINGTON (Reuters) - Top executives at major businesses last year made as much money in one day of work on the job as the average worker made over the entire year, according to a report released on Wednesday.
Chief executive officers from the nation's biggest businesses averaged nearly $11 million in total compensation, according to the 14th annual CEO compensation survey released jointly by the Institute for Policy Studies based in Washington and United for a Fair Economy, a national organization based in Boston.
At the same time, workers at the bottom rung of the U.S. economy received the first federal minimum wage increase in a decade. But the new wage of $5.85 an hour, after being adjusted for inflation, stands 7 percent below where the minimum wage stood a decade ago.
"CEO pay, over that same decade, has increased by roughly 45 percent," the study found.
On average, CEOs at major American corporations saw $1.3 million in pension gains last year. By contrast, 58.5 percent of American households led by a 45- to 54-year old even had a retirement account in 2004, the most recent year these figures were available.
According to the report, between 2001 and 2004, retirement accounts of these average households gained only $3,775 in value a year.
The top 386 CEOs in the study took in perks, such as housing allowances and travel benefits, worth on average $438,342 in 2006. It would take a minimum wage worker 36 years to earn the equivalent of what CEOs averaged in just perks alone.
The 20 highest-paid individuals at publicly traded corporations last year took home, on average, $36.4 million. That's 38 times more than the 20 highest-paid leaders in the non-profit sector and 204 times more than the 20 highest-paid generals in the U.S. military.
American executives significantly out-earn their European counterparts, the study found. In 2006, the 20 highest-paid European managers made an average of $12.5 million, a third as much as the 20 highest-paid U.S. executives took home last year.
By Joanne Morrison
WASHINGTON (Reuters) - Top executives at major businesses last year made as much money in one day of work on the job as the average worker made over the entire year, according to a report released on Wednesday.
Chief executive officers from the nation's biggest businesses averaged nearly $11 million in total compensation, according to the 14th annual CEO compensation survey released jointly by the Institute for Policy Studies based in Washington and United for a Fair Economy, a national organization based in Boston.
At the same time, workers at the bottom rung of the U.S. economy received the first federal minimum wage increase in a decade. But the new wage of $5.85 an hour, after being adjusted for inflation, stands 7 percent below where the minimum wage stood a decade ago.
"CEO pay, over that same decade, has increased by roughly 45 percent," the study found.
On average, CEOs at major American corporations saw $1.3 million in pension gains last year. By contrast, 58.5 percent of American households led by a 45- to 54-year old even had a retirement account in 2004, the most recent year these figures were available.
According to the report, between 2001 and 2004, retirement accounts of these average households gained only $3,775 in value a year.
The top 386 CEOs in the study took in perks, such as housing allowances and travel benefits, worth on average $438,342 in 2006. It would take a minimum wage worker 36 years to earn the equivalent of what CEOs averaged in just perks alone.
The 20 highest-paid individuals at publicly traded corporations last year took home, on average, $36.4 million. That's 38 times more than the 20 highest-paid leaders in the non-profit sector and 204 times more than the 20 highest-paid generals in the U.S. military.
American executives significantly out-earn their European counterparts, the study found. In 2006, the 20 highest-paid European managers made an average of $12.5 million, a third as much as the 20 highest-paid U.S. executives took home last year.
Although executives in the UK aren't doing too badly at all:
The Boardroom Bonanza
Julia Finch, City editor
Wednesday August 29, 2007
The Guardian
Boardroom pay at the UK's top companies soared 37% last year as full-time directors were rewarded with inflation-busting increases in basic salaries, big cash bonuses and substantial payouts from share schemes.
The surge in pay, which takes the average total pay for a chief executive to £2,875,000, is more than 11 times the increase in average earnings and nearly 20 times the rate of inflation as measured by the consumer price index. The ratio between bosses' rewards and employees' pay has risen to 98:1, up from 93:1 a year ago - meaning that the work of a chief executive is valued almost 100 times more highly than that of their employees.
The figures are revealed in the Guardian's annual survey of executive pay at the 100 biggest companies on the stock market, conducted in association with the pay consultancy Reward Technology Forum. The pay rise for the 2006/07 financial year is the biggest in recent years. The previous year directors' pay climbed 28%, following rises of 16% and 13%.
For the first time last year the rewards handed over to the directors of FTSE 100 companies topped £1bn. The news comes after the Guardian revealed that bonuses for City workers rose 30% last year. And the huge rewards are being paid at a time when increasing numbers of homeowners are facing the threat of repossession and household debt is at record levels.
The TUC general secretary, Brendan Barber, said top directors were "losing touch with reality" and described the disparity in rewards as "morally offensive".
Topping the league of FTSE 100 directors' pay is Bob Diamond, who heads the investment banking arm of Barclays Bank and earned £23m last year. Mr Diamond, who is not chief executive of the bank, earns a basic salary of only £250,000, but his package was magnified nearly 100-fold as a result of a performance bonus of £10m and about £12m in share awards.
Three other top earners earned eight-figure salaries. They include Bart Becht, chief executive of Reckitt Benckiser, the company behind household brands such as Cillit Bang and Mr Sheen, and Giles Thorley, the boss of the Punch Taverns pubs group. Their pay last year was £22m and £11m respectively. Mr Thorley also emerges as the boss whose salary is most out of line with his employees; his remuneration package is equal to 1,147 of his employees, mostly pub workers.
Lord Browne, the former chief executive of BP, received £11m. He was forced to step down earlier this year after it was revealed he had lied in court.
Part-time chairmen of top companies - who generally work no more than two days a week - now earn an average of £311,000, up 15% on a year ago.
The highest paid woman - with a pay package of £2.1m - was once again Dame Marjorie Scardino, the chief executive of Pearson, publisher of the Financial Times. She and Dorothy Thompson of the Drax power station company were the only two female chief executives in the survey period and their salaries lagged behind their peers by 25% and 75% respectively. There were only 16 female full-time executive directors of FTSE 100 companies, out of a total 527 such posts.
The Equal Opportunities Commission described that statistic as "shocking".
The 37% increase in average pay was fuelled by annual cash bonuses and gains from long-term, share-based incentives which enabled executives to cash in on rising share prices. Basic boardroom salaries were up just 5%. Including cash bonuses and other benefits the average increase was 13% - but it was stock market gains that provided the bumper returns.
Over the 12 months to the end of June the FTSE 100 share index rose 13.3% to 6,607.9. However, over the three years to the end of June - the minimum period for most share-based incentive schemes - the FTSE 100 soared by 48% from 4,464.1.
The recent turmoil on the stock market has seen share prices fall back since June, but they are still way higher than they were when many share options were awarded in recent years.
Some 1,389 directors served on the boards of companies surveyed. Of those 862 were independent, part-time non-executives whose role is to monitor and advise the executives. A total of 249 directors received salaries, bonuses and benefits that added up to more than £1m. If the gains from long-term share-based incentive plans are included, 337 directors were in the millionaires' club.
Mr Barber said: "It is impossible to believe that top directors have become so much more productive than the rest of their staff over the last year. This growing gap is not just morally offensive but hits workforce morale, feeds through into house price inflation and threatens social cohesion. Britain's boardrooms are slowly losing touch with reality."
Miles Templeman, director general at the Institute of Directors, said "exceptional performance should be rewarded" and pointed out that pension funds would also benefit from a rising stock market.
However, he said it was important that people did not believe all company directors were rewarded in the same way as FTSE 100 bosses.
Julia Finch, City editor
Wednesday August 29, 2007
The Guardian
Boardroom pay at the UK's top companies soared 37% last year as full-time directors were rewarded with inflation-busting increases in basic salaries, big cash bonuses and substantial payouts from share schemes.
The surge in pay, which takes the average total pay for a chief executive to £2,875,000, is more than 11 times the increase in average earnings and nearly 20 times the rate of inflation as measured by the consumer price index. The ratio between bosses' rewards and employees' pay has risen to 98:1, up from 93:1 a year ago - meaning that the work of a chief executive is valued almost 100 times more highly than that of their employees.
The figures are revealed in the Guardian's annual survey of executive pay at the 100 biggest companies on the stock market, conducted in association with the pay consultancy Reward Technology Forum. The pay rise for the 2006/07 financial year is the biggest in recent years. The previous year directors' pay climbed 28%, following rises of 16% and 13%.
For the first time last year the rewards handed over to the directors of FTSE 100 companies topped £1bn. The news comes after the Guardian revealed that bonuses for City workers rose 30% last year. And the huge rewards are being paid at a time when increasing numbers of homeowners are facing the threat of repossession and household debt is at record levels.
The TUC general secretary, Brendan Barber, said top directors were "losing touch with reality" and described the disparity in rewards as "morally offensive".
Topping the league of FTSE 100 directors' pay is Bob Diamond, who heads the investment banking arm of Barclays Bank and earned £23m last year. Mr Diamond, who is not chief executive of the bank, earns a basic salary of only £250,000, but his package was magnified nearly 100-fold as a result of a performance bonus of £10m and about £12m in share awards.
Three other top earners earned eight-figure salaries. They include Bart Becht, chief executive of Reckitt Benckiser, the company behind household brands such as Cillit Bang and Mr Sheen, and Giles Thorley, the boss of the Punch Taverns pubs group. Their pay last year was £22m and £11m respectively. Mr Thorley also emerges as the boss whose salary is most out of line with his employees; his remuneration package is equal to 1,147 of his employees, mostly pub workers.
Lord Browne, the former chief executive of BP, received £11m. He was forced to step down earlier this year after it was revealed he had lied in court.
Part-time chairmen of top companies - who generally work no more than two days a week - now earn an average of £311,000, up 15% on a year ago.
The highest paid woman - with a pay package of £2.1m - was once again Dame Marjorie Scardino, the chief executive of Pearson, publisher of the Financial Times. She and Dorothy Thompson of the Drax power station company were the only two female chief executives in the survey period and their salaries lagged behind their peers by 25% and 75% respectively. There were only 16 female full-time executive directors of FTSE 100 companies, out of a total 527 such posts.
The Equal Opportunities Commission described that statistic as "shocking".
The 37% increase in average pay was fuelled by annual cash bonuses and gains from long-term, share-based incentives which enabled executives to cash in on rising share prices. Basic boardroom salaries were up just 5%. Including cash bonuses and other benefits the average increase was 13% - but it was stock market gains that provided the bumper returns.
Over the 12 months to the end of June the FTSE 100 share index rose 13.3% to 6,607.9. However, over the three years to the end of June - the minimum period for most share-based incentive schemes - the FTSE 100 soared by 48% from 4,464.1.
The recent turmoil on the stock market has seen share prices fall back since June, but they are still way higher than they were when many share options were awarded in recent years.
Some 1,389 directors served on the boards of companies surveyed. Of those 862 were independent, part-time non-executives whose role is to monitor and advise the executives. A total of 249 directors received salaries, bonuses and benefits that added up to more than £1m. If the gains from long-term share-based incentive plans are included, 337 directors were in the millionaires' club.
Mr Barber said: "It is impossible to believe that top directors have become so much more productive than the rest of their staff over the last year. This growing gap is not just morally offensive but hits workforce morale, feeds through into house price inflation and threatens social cohesion. Britain's boardrooms are slowly losing touch with reality."
Miles Templeman, director general at the Institute of Directors, said "exceptional performance should be rewarded" and pointed out that pension funds would also benefit from a rising stock market.
However, he said it was important that people did not believe all company directors were rewarded in the same way as FTSE 100 bosses.
Talk about "creating your own reality"! And when you're next counting your pennies to try and keep your children fed, you might want to remember the following:
The looming food crisis
Land that was once used to grow food is increasingly being turned over to biofuels. This may help us to fight global warming - but it is driving up food prices throughout the world and making life increasingly hard in developing countries. Add in water shortages, natural disasters and an ever-rising population, and what you have is a recipe for disaster. John Vidal reports
Wednesday August 29, 2007
The Guardian
The mile upon mile of tall maize waving to the horizon around the small Nebraskan town of Carleton looks perfect to farmers such as Mark Jagels. He and his father farm 2,500 acres (10m sq km), the price of maize - what the Americans call corn - has never been higher, and the future has seldom seemed rosier. Carleton (town motto: "The center of it all") is booming, with $200m of Californian money put up for a new biofuel factory and, after years in the doldrums, there is new full-time, well-paid work for 50 people.
But there is a catch. The same fields that surround Jagels' house on the great plains may be bringing new money to rural America, but they are also helping to push up the price of bread in Manchester, tortillas in Mexico City and beer in Madrid. As a direct result of what is happening in places like Nebraska, Kansas, Indiana and Oklahoma, food aid for the poorest people in southern Africa, pork in China and beef in Britain are all more expensive.
Challenged by President George Bush to produce 35bn gallons of non-fossil transport fuels by 2017 to reduce US dependency on imported oil, the Jagels family and thousands of farmers like them are patriotically turning the corn belt of America from the bread basket of the world into an enormous fuel tank. Only a year ago, their maize mostly went to cattle feed or was exported as food aid. Come harvest time in September, almost all will end up at the new plant at Carleton, where it will be fermented to make ethanol, a clear, colourless alcohol consumed, not by people, but by cars.
The era of "agrofuels" has arrived, and the scale of the changes it is already forcing on farming and markets around the world is immense. In Nebraska alone, an extra million acres of maize have been planted this year, and the state boasts it will produce 1bn gallons of ethanol. Across the US, 20% of the whole maize crop went to ethanol last year. How much is that? Just 2% of US automobile use.
"Probably hasn't looked any better than it looks right now," Jerry Stahr, another Nebraskan farmer, told his local paper recently.
Jagels and Stahr are part of a global green rush, one of the greatest shifts that world agriculture has seen in decades. As the US, Europe, China, Japan and other countries commit themselves to using 10% or more alternative automobile fuels, farmers everywhere are rushing to grow maize, sugar cane, palm oil and oil seed rape, all of which can be turned into ethanol or other biofuels for automobiles. But that means getting out of other crops.
The scale of the change is boggling. The Indian government says it wants to plant 35m acres (140,000 sq km) of biofuel crops, Brazil as much as 300m acres (1.2m sq km). Southern Africa is being touted as the future Middle East of biofuels, (Fantastic! Perhaps we'll also need to "liberated" like Iraq in the near future then?) with as much as 1bn acres (4m sq km) of land ready to be converted to crops such as Jatropha curcas (physic nut), a tough shrub that can be grown on poor land. Indonesia has said it intends to overtake Malaysia and increase its palm oil production from 16m acres (64,000 sq km) now to 65m acres (260,000 sq km) in 2025.
While this may be marginally better for carbon emissions and energy security, it is proving horrendous for food prices and anyone who stands in the way of a rampant new industry. A year or two ago, almost all the land where maize is now being grown to make ethanol in the US was being farmed for human or animal food. And because America exports most of the world's maize, its price has doubled in 10 months, and wheat has risen about 50%.
The effect on agriculture in the UK is price increases all round. "The world price [of maize] has doubled," says Mark Hill, food partner at the business advisory firm Deloitte. "In June, wheat prices across the US and Europe hit their highest levels in more than a decade. These price hikes are likely to trigger inflation in food prices, as processors are forced to pay increased costs for basic ingredients such as corn and wheat."
UK flour millers, for example, need 5.5m tonnes of wheat to produce the 12m loaves sold each day in the UK. The majority of this wheat is grown in the UK, and in the last year milling wheat prices moved from around £100 a tonne to £200 a tonne. Hovis raised the price of a standard loaf from 93p to 99p in February and has said more increases are on the way. In France, consumers have also been warned that their beloved baguette will become more expensive.
The era of cheap food is over, says Hill. World commodity prices of sugar, milk and cocoa have all surged, prompting the biggest increase in retail food prices in three decades in some countries. "Meat, too, will cost more because chicken and pigs are fed largely on grain," says Hill. "And while anyone growing grains will be better off, dairy and livestock producers may well struggle in this environment."
But the surge in demand for agrofuels such as ethanol is hitting the poor and the environment the hardest. The UN World Food Programme, which feeds about 90m people mostly with US maize, reckons that 850m people around the world are already undernourished. There will soon be more because the price of food aid has increased 20% in just a year. Meanwhile, Indian food prices have risen 11% in a year, the price of the staple tortilla quadrupled in Mexico in February and crowds of 75,000 people came on to the streets in protest. South Africa has seen food-price rises of nearly 17%, and China was forced to halt all new planting of corn for ethanol after staple foods such as pork soared by 42% last year.
In the US, where nearly 40 million people are below the official poverty line, the Department of Agriculture recently predicted a 10% rise in the price of chicken. The prices of bread, beef, eggs and milk rose 7.5 % in July, the highest monthly rise in 25 years.
"The competition for grain between the world's 800 million motorists, who want to maintain their mobility, and its two billion poorest people, who are simply trying to survive, is emerging as an epic issue," says Lester Brown, president of the Washington-based Worldwatch Institute thinktank, and author of the book Who Will Feed China?
It is not going to get any better, says Brown. The UN's World Food Organisation predicts that demand for biofuels will grow by 170% in the next three years. A separate report from the OECD, the club of the world's 30 richest countries, suggested food-price rises of between 20% and 50% over the next decade, and the head of Nestlé, the world's largest food processor, said prices would remain high as far as anyone could see ahead.
A "perfect storm" of ecological and social factors appears to be gathering force, threatening vast numbers of people with food shortages and price rises. Even as the world's big farmers are pulling out of producing food for people and animals, the global population is rising by 87 million people a year; developing countries such as China and India are switching to meat-based diets that need more land; and climate change is starting to hit food producers hard. Recent reports in the journals Science and Nature suggest that one-third of ocean fisheries are in collapse, two-thirds will be in collapse by 2025, and all major ocean fisheries may be virtually gone by 2048. "Global grain supplies will drop to their lowest levels on record this year. Outside of wartime, they have not been this low in a century, perhaps longer," says the US Department of Agriculture.
In seven of the past eight years the world has actually grown less grain than it consumed, says Brown. World stocks of grain - that is, the food held in reserve for times of emergency - are now sufficient for just over 50 days. According to experts, we are in "the post- food-surplus era".
The food crisis, Brown warns, is only just beginning. What worries him as much as the new competition between food and fuel is that the booming Chinese and Indian populations - the two largest nations in the world, with nearly 40% of the world's population between them - are giving up their traditional vegetable-rich diets to adopt typical "American" diets that contain more meat and dairy products. Meat demand in China has quadrupled in 30 years, and in India, milk and egg products are increasingly popular.
In itself, this is no problem, say Brown and others, except that it means an accelerated demand for water to grow more food. It takes 7kg of grain to produce 1kg of beef, and increased demand will require huge amounts of grain-growing land. Much of this, of course, will need to be irrigated. "Water tables are now falling in countries that contain over half the world's people," Brown points out. "While numerous analysts and policymakers are concerned about a future of water shortages, few have connected the dots to see that a future of water shortages means a future of food shortages."
New figures from the World Bank, he says, show that 15% of the world's present food supplies, on which 160 million people depend, are being grown with water drawn from rapidly depleting underground sources or from rivers that are drying up. In large areas of China and India, the water table has fallen catastrophically.
Scientists are becoming increasingly alarmed. Earlier this year, water specialists from hundreds of institutes around the world published the biggest ever assessment of water and food. Their conclusions were chilling. With the earth's water, land and human resources, it would be possible to produce enough food for the future, they said. "But it is probable that today's food production and environmental trends will lead to crises in many parts of the world," said David Molden, deputy director general of the International Water Management Institute.
Climate change, meanwhile, is leading to more intense rains, unpredictable storms, longer-lasting droughts, and interrupted seasons. In Britain, the recent floods will result in a shortage of vegetables such as potatoes and peas, and cereals such as wheat. This comes on top of a 4.9% rise in food prices in the year to May - well over consumer price inflation - and a 9.6% hike in vegetable prices.
Britain can get by, but elsewhere climate change is proving disastrous. "I met leaders from Madagascar reeling from seven cyclones in the first six months of the year," Josette Sheeran, new director of the World Food Programme, told colleagues in Rome recently. "I asked them when the season ends and was told that such questions are becoming more difficult to answer. Farmers know that predictable patterns in weather are becoming a thing of the past. How does the global food supply system deal with such changing risk?"
The answer is: with ever greater difficulty. The Intergovernmental Panel on Climate Change predicts that rain-dependent agriculture could be cut in half by 2020 as a result of climate change. "Anything even close to a 50% reduction in yields would obviously pose huge problems," said Sheeran. Within a week, Lesotho had declared a food emergency after the worst drought in 30 years and greatly reduced harvests in neighbouring South Africa pushed prices well beyond the reach of most of the population. (Oh yeah, there's no place like home!)
All this is far too gloomy, say other analysts and politicians. Earlier this year, Brazil's president, Luiz Lula, told the Guardian that there was no need for world food shortages, or any destruction of forests to grow more food at all. "Brazil has 320m hectares [3.2m sq km] of arable land, only a fifth of which is cultivated. Of this, less than 4% is used for ethanol production ... This is not a choice between food and energy."
Others say that the food price rises now being seen are temporary and will fall back within a year as the market responds. Technologists pin their faith on GM crops, or drought- resistant crops, or trust that biofuel producers will develop technologies that require less raw material or use non-edible parts of food. The immediate best bet is that countries such as Argentina, Poland, Ukraine and Kazakhstan will grow more food for export as US output declines.
Back on the great plains, meanwhile, ethanol fever is running high. This time last year, there were fewer than 100 ethanol plants in the whole United States, with a combined production capacity of 5bn gallons. There are now at least 50 more new plants being built and over 300 more are planned. If even half of them are finished, they will help to rewrite the politics of global food.
Land that was once used to grow food is increasingly being turned over to biofuels. This may help us to fight global warming - but it is driving up food prices throughout the world and making life increasingly hard in developing countries. Add in water shortages, natural disasters and an ever-rising population, and what you have is a recipe for disaster. John Vidal reports
Wednesday August 29, 2007
The Guardian
The mile upon mile of tall maize waving to the horizon around the small Nebraskan town of Carleton looks perfect to farmers such as Mark Jagels. He and his father farm 2,500 acres (10m sq km), the price of maize - what the Americans call corn - has never been higher, and the future has seldom seemed rosier. Carleton (town motto: "The center of it all") is booming, with $200m of Californian money put up for a new biofuel factory and, after years in the doldrums, there is new full-time, well-paid work for 50 people.
But there is a catch. The same fields that surround Jagels' house on the great plains may be bringing new money to rural America, but they are also helping to push up the price of bread in Manchester, tortillas in Mexico City and beer in Madrid. As a direct result of what is happening in places like Nebraska, Kansas, Indiana and Oklahoma, food aid for the poorest people in southern Africa, pork in China and beef in Britain are all more expensive.
Challenged by President George Bush to produce 35bn gallons of non-fossil transport fuels by 2017 to reduce US dependency on imported oil, the Jagels family and thousands of farmers like them are patriotically turning the corn belt of America from the bread basket of the world into an enormous fuel tank. Only a year ago, their maize mostly went to cattle feed or was exported as food aid. Come harvest time in September, almost all will end up at the new plant at Carleton, where it will be fermented to make ethanol, a clear, colourless alcohol consumed, not by people, but by cars.
The era of "agrofuels" has arrived, and the scale of the changes it is already forcing on farming and markets around the world is immense. In Nebraska alone, an extra million acres of maize have been planted this year, and the state boasts it will produce 1bn gallons of ethanol. Across the US, 20% of the whole maize crop went to ethanol last year. How much is that? Just 2% of US automobile use.
"Probably hasn't looked any better than it looks right now," Jerry Stahr, another Nebraskan farmer, told his local paper recently.
Jagels and Stahr are part of a global green rush, one of the greatest shifts that world agriculture has seen in decades. As the US, Europe, China, Japan and other countries commit themselves to using 10% or more alternative automobile fuels, farmers everywhere are rushing to grow maize, sugar cane, palm oil and oil seed rape, all of which can be turned into ethanol or other biofuels for automobiles. But that means getting out of other crops.
The scale of the change is boggling. The Indian government says it wants to plant 35m acres (140,000 sq km) of biofuel crops, Brazil as much as 300m acres (1.2m sq km). Southern Africa is being touted as the future Middle East of biofuels, (Fantastic! Perhaps we'll also need to "liberated" like Iraq in the near future then?) with as much as 1bn acres (4m sq km) of land ready to be converted to crops such as Jatropha curcas (physic nut), a tough shrub that can be grown on poor land. Indonesia has said it intends to overtake Malaysia and increase its palm oil production from 16m acres (64,000 sq km) now to 65m acres (260,000 sq km) in 2025.
While this may be marginally better for carbon emissions and energy security, it is proving horrendous for food prices and anyone who stands in the way of a rampant new industry. A year or two ago, almost all the land where maize is now being grown to make ethanol in the US was being farmed for human or animal food. And because America exports most of the world's maize, its price has doubled in 10 months, and wheat has risen about 50%.
The effect on agriculture in the UK is price increases all round. "The world price [of maize] has doubled," says Mark Hill, food partner at the business advisory firm Deloitte. "In June, wheat prices across the US and Europe hit their highest levels in more than a decade. These price hikes are likely to trigger inflation in food prices, as processors are forced to pay increased costs for basic ingredients such as corn and wheat."
UK flour millers, for example, need 5.5m tonnes of wheat to produce the 12m loaves sold each day in the UK. The majority of this wheat is grown in the UK, and in the last year milling wheat prices moved from around £100 a tonne to £200 a tonne. Hovis raised the price of a standard loaf from 93p to 99p in February and has said more increases are on the way. In France, consumers have also been warned that their beloved baguette will become more expensive.
The era of cheap food is over, says Hill. World commodity prices of sugar, milk and cocoa have all surged, prompting the biggest increase in retail food prices in three decades in some countries. "Meat, too, will cost more because chicken and pigs are fed largely on grain," says Hill. "And while anyone growing grains will be better off, dairy and livestock producers may well struggle in this environment."
But the surge in demand for agrofuels such as ethanol is hitting the poor and the environment the hardest. The UN World Food Programme, which feeds about 90m people mostly with US maize, reckons that 850m people around the world are already undernourished. There will soon be more because the price of food aid has increased 20% in just a year. Meanwhile, Indian food prices have risen 11% in a year, the price of the staple tortilla quadrupled in Mexico in February and crowds of 75,000 people came on to the streets in protest. South Africa has seen food-price rises of nearly 17%, and China was forced to halt all new planting of corn for ethanol after staple foods such as pork soared by 42% last year.
In the US, where nearly 40 million people are below the official poverty line, the Department of Agriculture recently predicted a 10% rise in the price of chicken. The prices of bread, beef, eggs and milk rose 7.5 % in July, the highest monthly rise in 25 years.
"The competition for grain between the world's 800 million motorists, who want to maintain their mobility, and its two billion poorest people, who are simply trying to survive, is emerging as an epic issue," says Lester Brown, president of the Washington-based Worldwatch Institute thinktank, and author of the book Who Will Feed China?
It is not going to get any better, says Brown. The UN's World Food Organisation predicts that demand for biofuels will grow by 170% in the next three years. A separate report from the OECD, the club of the world's 30 richest countries, suggested food-price rises of between 20% and 50% over the next decade, and the head of Nestlé, the world's largest food processor, said prices would remain high as far as anyone could see ahead.
A "perfect storm" of ecological and social factors appears to be gathering force, threatening vast numbers of people with food shortages and price rises. Even as the world's big farmers are pulling out of producing food for people and animals, the global population is rising by 87 million people a year; developing countries such as China and India are switching to meat-based diets that need more land; and climate change is starting to hit food producers hard. Recent reports in the journals Science and Nature suggest that one-third of ocean fisheries are in collapse, two-thirds will be in collapse by 2025, and all major ocean fisheries may be virtually gone by 2048. "Global grain supplies will drop to their lowest levels on record this year. Outside of wartime, they have not been this low in a century, perhaps longer," says the US Department of Agriculture.
In seven of the past eight years the world has actually grown less grain than it consumed, says Brown. World stocks of grain - that is, the food held in reserve for times of emergency - are now sufficient for just over 50 days. According to experts, we are in "the post- food-surplus era".
The food crisis, Brown warns, is only just beginning. What worries him as much as the new competition between food and fuel is that the booming Chinese and Indian populations - the two largest nations in the world, with nearly 40% of the world's population between them - are giving up their traditional vegetable-rich diets to adopt typical "American" diets that contain more meat and dairy products. Meat demand in China has quadrupled in 30 years, and in India, milk and egg products are increasingly popular.
In itself, this is no problem, say Brown and others, except that it means an accelerated demand for water to grow more food. It takes 7kg of grain to produce 1kg of beef, and increased demand will require huge amounts of grain-growing land. Much of this, of course, will need to be irrigated. "Water tables are now falling in countries that contain over half the world's people," Brown points out. "While numerous analysts and policymakers are concerned about a future of water shortages, few have connected the dots to see that a future of water shortages means a future of food shortages."
New figures from the World Bank, he says, show that 15% of the world's present food supplies, on which 160 million people depend, are being grown with water drawn from rapidly depleting underground sources or from rivers that are drying up. In large areas of China and India, the water table has fallen catastrophically.
Scientists are becoming increasingly alarmed. Earlier this year, water specialists from hundreds of institutes around the world published the biggest ever assessment of water and food. Their conclusions were chilling. With the earth's water, land and human resources, it would be possible to produce enough food for the future, they said. "But it is probable that today's food production and environmental trends will lead to crises in many parts of the world," said David Molden, deputy director general of the International Water Management Institute.
Climate change, meanwhile, is leading to more intense rains, unpredictable storms, longer-lasting droughts, and interrupted seasons. In Britain, the recent floods will result in a shortage of vegetables such as potatoes and peas, and cereals such as wheat. This comes on top of a 4.9% rise in food prices in the year to May - well over consumer price inflation - and a 9.6% hike in vegetable prices.
Britain can get by, but elsewhere climate change is proving disastrous. "I met leaders from Madagascar reeling from seven cyclones in the first six months of the year," Josette Sheeran, new director of the World Food Programme, told colleagues in Rome recently. "I asked them when the season ends and was told that such questions are becoming more difficult to answer. Farmers know that predictable patterns in weather are becoming a thing of the past. How does the global food supply system deal with such changing risk?"
The answer is: with ever greater difficulty. The Intergovernmental Panel on Climate Change predicts that rain-dependent agriculture could be cut in half by 2020 as a result of climate change. "Anything even close to a 50% reduction in yields would obviously pose huge problems," said Sheeran. Within a week, Lesotho had declared a food emergency after the worst drought in 30 years and greatly reduced harvests in neighbouring South Africa pushed prices well beyond the reach of most of the population. (Oh yeah, there's no place like home!)
All this is far too gloomy, say other analysts and politicians. Earlier this year, Brazil's president, Luiz Lula, told the Guardian that there was no need for world food shortages, or any destruction of forests to grow more food at all. "Brazil has 320m hectares [3.2m sq km] of arable land, only a fifth of which is cultivated. Of this, less than 4% is used for ethanol production ... This is not a choice between food and energy."
Others say that the food price rises now being seen are temporary and will fall back within a year as the market responds. Technologists pin their faith on GM crops, or drought- resistant crops, or trust that biofuel producers will develop technologies that require less raw material or use non-edible parts of food. The immediate best bet is that countries such as Argentina, Poland, Ukraine and Kazakhstan will grow more food for export as US output declines.
Back on the great plains, meanwhile, ethanol fever is running high. This time last year, there were fewer than 100 ethanol plants in the whole United States, with a combined production capacity of 5bn gallons. There are now at least 50 more new plants being built and over 300 more are planned. If even half of them are finished, they will help to rewrite the politics of global food.
