Walker's World: The new Egypt needs food

LONDON, Feb. 14 (UPI) -- As Egypt seeks to establish a new and representative political system after the fall of the Mubarak regime, the one helpful action the United States and Europe could take would be to ensure that Egypt's drama doesn't turn into desperate tragedy by ensuring its food supply.

Food shortages and rising prices were one of the underlying factors behind the explosions in Tunisia and Egypt, with demonstrators brandishing loaves of bread and complaining of the high price of staples like lentils. The increased costs of feeding Egypt, the world's leading importer of wheat, could topple the fledgling new government.

Other Arab and Islamic governments have been desperately buying up wheat on world markets. Algeria paid top price for 800,000 tons of wheat last month. Indonesia is buying 800,000 tons of rice. Saudi Arabia, Jordan, Libya and Bangladesh are all scouring the world markets for more, spurring the United Nations' Food and Agricultural Organization appeal against panic buying that would "aggravate the situation."

With world food prices hitting highs this month, the situation is about to get a deal worse thanks to the latest report of what the official Xinhua news agency says is China's worst drought for 60 years. Xinhua added that Shandong Province, the heartland of Chinese grain production, was facing its worst drought in 200 years unless serious rains come this month.

Reports from witnesses say the land is so dry from Beijing south through the provinces of Hebei, Henan and Shandong to Jiangsu province and Shanghai that trees and houses are coated with dust -- the topsoil that has blown off the drought-parched farmland.

Almost 8 million hectares of winter wheat -- 42 percent of the total planted in the eight major producing provinces -- are affected by the drought, a statement Friday by Minister of Agriculture Han Changfu claims. China's President Hu Jintao and Prime Minister Wen Jiabao each visited the drought-stricken regions and each called for "all-out efforts" to cope with the water shortage.

"China's grain situation is critical to the rest of the world -- if they are forced to go out on the market to procure adequate supplies for their population, it could send huge shock waves through the world's grain markets," argues Robert S. Zeigler, director of the International Rice Research Institute in the Philippines. "They can buy whatever they need to buy and they can outbid anyone."

That is the real concern for the threatened regimes of the Arab world. Once China with its massive sayings of almost $3 trillion in cash starts to hit world food markets, few other countries are likely to be able to afford to import the grain needed to fend of riots and even starvation. Hungry people have little patience and few options and if the United States and Europe want events in Egypt to unfold in an orderly and peaceful manner, food supplies may be the key.

Even without the drought in China, the world was already facing a food crisis. The drought and fires in Russia last year, followed by the devastating floods in Australia and Brazil, have pushed world food stocks dangerously low and driven prices to record highs -- with disturbing political implications.

"People often in developing countries spend half or three quarters of their income in food, so they've got little margin," World Bank President Robert Zoellick noted last week. "Egypt is a very big wheat importer, food prices have been going up, so while we're in a transition process we have to be trying to think of how to help the country get through to the next steps."

Governments around the world are reacting in different ways by buying stocks or by trying to force food prices down, as Israel did last week by cutting fuel and water taxes, or by passing new legislation. Indian Prime Minister Manmohan Singh said last week that his government was introducing a Right to Food Act to guarantee safety net for India's 400 million poorest people among whom malnutrition was particularly high.

U.S. Department of Agriculture data indicate the world's top wheat importers are Egypt, with almost 10 million tons a year, and Iran with 8 million tons. Algeria imports more than 5 million tons, Morocco imports 4 million tons and Nigeria and Turkey each import 3.5 million tons. So the vulnerability of Arab and Islamic countries to rising prices is particularly severe.

But China is the joker in the pack. Usually self-sufficient in food, China accounts for almost 20 percent of global wheat output, producing nearly twice as much wheat as the United States or Russia and more than five times as much as Australia. China also produces one-fifth of the world's corn, mostly in the northern provinces where the current drought is most acute.

The new concern is for China's rice crop, grown mostly in the south and highly vulnerable to drought. The signs are ominous, since the Hong Kong Observatory reports that the region received only half of its usual rainfall in December and only 22 percent of its usual rainfall in January.

As the world's largest importer of soybeans, mainly for animal feed, China already has a steep food import bill. And with more than 50 million tons of wheat stockpiled, about half the usual harvest, China has a cushion. And it can call on military resources to seed clouds to stimulate rain. But if this year's rice and corn harvests are disappointing, China may have to buy heavily on world markets, plunging Egypt, Morocco, Algeria and Iran into new crises.