Rising food prices hit home -- Bolivia's poor, whom sit at "the heart of South America" -- go hungry as food prices continue to rise

Apologies if entries this weekend where a bit "lacking." I was traveling and simply had little access to computers.

Following up to this mornings post, in which I discussed in brief the tremendous untapped agricultural capacity of South America, emphasizing Brazil and Argentina, I present the other side of the story via this video from Reuters.



Bolivia, South America's poorest country used to feed over half a million people using UN donations. Those same donations, in the wake of rising fuel costs, can feed a mere 200,000 today, leaving many with empty stomachs as the video above describes.

The question remains... Yes, no one doubts the "richness" of Latin America, but how do you translate natural resources or un-tapped agriculture potential into sustainable development? Second, how do these countries keep their resources from being exploited by multi-nationals or corrupt and greedy locals?

Most Latino's learn in school and as they grow up their countries are richly endowed with resources, giving their countries the potential to emerge from poverty and develop their countries. Sadly, this has not been the case for any Latin American country, perhaps Chile being a unique example once again.

Chile did succeed to a certain degree in this, putting much of their copper wealth towards sustainable economic development goals. The Chilenean economy emerged significantly more competitive and efficient compared to its neighbors in South America.

Let us not forget the high-cost and much suffering on the parts of some people who lived through the Pinochet dictatorship and the reforms of the "Chicago boys."

Bolivia, itself, in the past 15-20 years has developed its own agricultural capacities in the low lands of the country. I learn new things about Bolivia everyday, society is quite fragmented between the mestizo population (and European descended), and the indigenous community. Despite social and racial problems, a countries people, endowed wit vast resources as Bolivia should not be going hungry.

Bolivia is a unique country in South America, the good man Erneste "Che" Guevara called it the "heart of the America's," and that it is. I hope to see the country with my own two eyes one day before I pass further judgment, but no less, regional methods or a more cohesive internal movement should be put in place to at least alleviate malnutrition and hunger in Latin America.

The continent is poor, but always prided itself as being a poor continent which at least "did not go hungry." This age old myth (yes... myth), is now also on the verge of disappearing as food prices around the world continue to rise.

Argentina's agricultural sector in focus -- ''There's a lot of capacity in Argentina, including a lot of capacity that hasn't been met,'' Pisacco said

''There's a lot of capacity in Argentina, including a lot of capacity that hasn't been met,'' Pisacco said. ``We believe we'll be able to help feed the rest of the world.''

A farmer in Argentina told a reporter for the Miami Herald, this weekend. Click here to read the full article.

No less, the current picture of the global economy remains quite gloomy, and leaders around the world will be desperate to keep their people from going hungry, including the countries of South America.

South America, in particular Argentina and Brazil, currently have found themselves as possible answers to world food shortages and sky rocketing prices.

Ironic as large portions of the population in these countries and South America as a whole live in poverty and struggle on a daily basis.

Central and South America as they have been centuries, are stuck within greater global economy with a image they have found hard to shed. Articulated very nicely in Michael Reid's book "the Forgotten Continent," mentioned in earlier posts, as follows:

"Latin America has often been condemned to failure. Neither poor enough to evoke Africa's moral crusade, nor as explosively booming as India and China, it has largely been overlooked by the West."

Click here to purchase the book

China to become net importer of grain -- more customers for Latin America

China Will Become a Net Grain Importer in the Future

By Interfax-China
05 Jun 2008 at 09:08 AM GMT-04:00

SHANGHAI (Interfax-China) -- China will become a net grain importer due to the country's limited capacity to further expand grain supplies, China's Ministry of Commerce (MOFCOM) said today in a research report.

"We should realize that tight grain supplies in China will be a common phenomena in the future. In the mid or long term, we will become a net grain importing country," the report, drafted by MOFCOM's policy research department, said.

Rapid economic growth has fuelled strong demand growth for grain, but production disruptions caused by climate change and natural disasters, as well as falling inventories, have caused global grain prices to rise as supplies tighten. Soaring energy prices and biofuel projects have only added to the upward pressure on prices.

Over the next 10 years, global cereal prices will grow by at least 10% to 20%, the ministry forecast.

China has grown increasingly vulnerable to price swings on the international market, as the sharp growth of international crude oil prices has pushed up fertilizer and pesticide prices, raising production costs for farmers. Meanwhile, the mood of domestic traders is increasingly affected by fluctuations on overseas markets.

For grains like wheat and corn, China still maintains strong control over prices due to its high self-supply sufficiency ratio of over 95%. But for soybean products, China is particularly vulnerable to swings on the international market as 68% of the country's soybeans are imported, according to MOFCOM.

To face the potential grain supply threat, MOFCOM has encouraged the overseas expansion of Chinese agriculture firms through the development of farms in arable land-rich Africa, Southeast Asia, South America and Russia.

Commentary

We have been warning since last year that China would become a net grain importer in the future. This is the first time an official Chinese government agency has echoed this forecast publicly.

The agri business is in fact a business of arable land, fresh water and sunlight. On per capita basis, China is facing shortages of both arable land and fresh water. This convinces us that the end of China's grain supply self-sufficiency is just a matter of time.

Indeed, at a recent Interfax presentation, we predicted that China's self-sufficiency ratio would drop to 83.5% by 2020. Varying factors will contribute to this increased dependency, including: population growth, urbanization, land erosion and changing dietary habits. A full report is available to subscribers.

This MOFCOM forecast, while representing a definite change of attitude, continues to reflect what we believe to be an overly optimistic view.

We agree that at current production levels, and adequate reserves, China maintains grain security in rice and wheat. However, even here, previous high levels of stockpiles are not being maintained. Of more immediate concern is the extremely tight corn market, which is barely balanced even after restrictive usage policies were implemented.

Unexpected natural disasters, such at that seen in the January snowstorms and the May 12 Sichuan earthquake, may well result in China becoming more generally dependent on grain imports much sooner than MOFCOM is ready to concede at the moment. Look for future statements from the authorities.

� Interfax-China 2008. For further information regarding Interfax China Commodities Daily Reports, contact David Harman at david.harman@interfax-news.com. Interfax also publishes a comprehensive China Grains & Soft Special Report, contact David Harman for details.