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The Shock That Staggers World Food Production
Plain Truth Magazine
October-November 1980
Volume: Vol 45, No.9
Issue: ISSN 0032-0420
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The Shock That Staggers World Food Production
Donald D Schroeder

The bridge to easy and abundant food supplies and prosperity has been burned down. Many nations are now forced to mortgage the earnings of future generations to eat and survive today!

   THE FOUNDATIONS of world food production began to shake and crumble seven years ago. It started with the 1973 Arab oil embargo against the supporters of the state of Israel.
   Subsequent decisions by Mideast oil producers quadrupled oil prices. This staggered not just energy voracious industrial and technological nations, but food-short developing nations desperately struggling to feed soaring populations with limited economic and land resources. Here is how.

Profound Shock

   Soaring oil prices were at first greeted with shock and disbelief in the Third World a term applied to largely nonindustrial but developing countries. There was no two-tiered oil pricing system one for rich nations, one for struggling developing nations as they hoped. Oil prices and subsequent energy-related costs soared for all nations.
   Imagine the impact on developing nations, already handicapped with meager foreign exchange reserves and limited development. Between 1972 and 1974, the combination of drought, fertilizer shortages and high energy costs tripled the import prices of wheat, rice, corn (maize) and soybeans. Soaring food and fuel prices meant less foreign exchange for other much needed items such as fertilizer or industrial development equipment.
   In 1974, motorists in America, Europe and Japan fretted about long lines or high costs, at gas stations. In India and other developing nations, irrigation pumps sputtered and died for lack of fuel. Precious water ceased flowing in ditches across fields.
   Bearded Sikhs in the Punjab, and weary tenant farmers in the Philippines walked from their fields, carrying gasoline cans. They collected along roadsides, waiting for fuel trucks that did not come. The sun beat down and fields dried up.
   "There is no fuel. The fertilizer costs so much. It's bad very bad," said Charan Singh Maan, typical of farmers in the Punjab, one of India's most productive agricultural states, during this crisis. He, like many other farmers, was forced to sell his tractor, cut back purchases of fertilizer and watch wheat production falter on his family farm.
   The energy crisis has inconvenienced rich developed nations. Energy short developing nations are hungrier and poorer. Today, chemical fertilizer and pesticide costs are double, triple or more what they were in the early 1970s. Petroleum import prices have soared more than I 500 percent.

Unparalleled Times

   You're living in a totally different world! These events are giant hammer blows to the survival of nations!
   Prices of modern life-essential commodities don't just increase regularly any more. Now they leap, they double, triple or more, often in one year's time.
   The world can't keep going on this way. A handful of nations possessing critical resources or power are now face-to-face with the fact that their decisions may mean other nations may suffer total economic collapse and millions may starve. Desperate nations will go to war rather than starve or collapse.
   Why can't the nations of mankind solve their human problems and needs with equity and justice? The Bible reveals the answer through the prophet Isaiah:
   "The way of peace they know not.... We wait for light, but behold obscurity; for brightness, but we walk in darkness.... We stumble at noon day as in the night [especially with our agricultural planning]..." (Isaiah 59:8-10).

Food: Energy Related

   You may not realize just how energy-dependent modern agriculture is in developing nations like India, the Philippines or Latin America, as well as the technologically developed nations like the United States, Europe or Japan.
   One third of world crop production is attributed to the use of chemical fertilizers and pesticides that are made, for the most part, from petroleum or fossil-fuel feedstocks.
   The great post-World War II growth in world food production and world population was propelled by cheap and abundant energy supplies as well as good weather. These former blessings are no more.
   The Green Revolution during the 1960s and 1970s locked many developing as well as developed nations into dependence on energy-intensive agriculture fossil fuels, chemical fertilizers and pesticides.
   This type of agriculture has kept several heavily populated developing nations like India, the Philippines and Pakistan - just short of the precipice of mass famine. But to sustain and increase agricultural production these nations must import much of their petroleum and fertilizer supplies.
   India, for example, must import nearly half of its petroleum and chemical fertilizers. India, however, is more fortunate than some developing nations. Half of Latin American countries, for instance, must import all of their oil and most of their chemical fertilizers.
   More than half the acreage of wheat planted in India and Pakistan, over half the rice acreage in the Philippines, and lesser but still significant acreages in other developing nations, are high-yield varieties. Without heavy use of chemical fertilizers and pesticides, and without sufficient irrigation water at the right times, yields from these grains would be but little more than from traditional varieties, and maybe even less.
   Take fuel and chemical fertilizers out of the Green Revolution and its glamorous yields come tumbling down. In recent years, skyrocketing world oil import prices and refining difficulties in some nations have priced gasoline, diesel fuel, fertilizer and pesticides out of the reach of many developing nations' farmers. Yields are declining in more and more areas.
   Yet, food experts say developing nations must double or triple fertilizer and pesticide use to realize the full potential of the Green Revolution. They must use energy-intensive agriculture to have a chance at feeding future soaring population growth.
   Now that possibility has been priced out of the reach of many developing nations. So more and more nations are forced to import increasing amounts of food to make up shortfalls in food production. In fact, of the around 150 nations in the world, more than 140 must import some or sizable quantities of their food. Only four nations the United States, Canada, Australia and Argentina are major food grain exporters.

Food to Highest Bidders

   You may assume that most food exports from the handful of major food exporters particularly from North America go to the hungriest nations. Just the opposite is true. Seventy percent of food exports go to advanced nations with growing populations, insufficient food grain production and affluent food demands - especially Japan, Europe (including Eastern Europe) and Russia.
   The developing nations, with limited cash reserves, compete with affluent nations for food.
   Little food is now given away in government food-aid programs from the United States or any other nation. Only relatively little can be. Food is no longer cheap to produce. Petroleum prices have risen over 100 percent just in the past year alone.
   Surplus foods or cash crops (even in many food-short developing nations) must be sold to pay growing import costs particularly high oil and industrial import costs. Food exporters sell to those who can pay for it.

Mortgaged Future vs. Mass Famine

   You may wonder how so many energy- and food-importing nations, particularly the poorer nations with limited foreign exchange, have been able to meet soaring energy, food, fertilizer and development bills but still avert bankruptcy.
   The answer is, many middle and low-income nations have been heavily borrowing money wherever they can. They have been borrowing from international banks, the International Monetary Fund and United Nations development agencies. OPEC (Organization of Petroleum Exporting Countries) has also established a fund for grants and loans to developing nations.
   From Brazil to Zaire, developing nations have mortgaged the income of future generations to pay for oil, food, fertilizers and other imports that were consumed years ago.
   The Philippines is a case in example. That nation relies on imported fuel for 93 percent of its energy needs. Spiraling world oil prices have been little short of a national disaster.
   Like many developing nations, the Philippines turned to foreign borrowing to ease the 1974 oil and balance-of-payment shock. The country is now staggering under a $9 billion foreign debt, up 20 percent in 1979 over 1978.
   Since 1974, the year of the first oil shock, the debt of less-developed nations has tripled to more than $370 billion. It was only around $60 billion 10 years ago. The World Bank projects that, at present trends, the debt load of developing nations will increase to $1.2.trillion in the next 10 years!
   By 1990, developing countries are expected to be borrowing close to $200 billion annually and accepting another $70 billion in direct aid to finance their growing demand for food, energy and development.
   The great worry among international bankers and lenders is that the ability of many of these nations to pay back such massive loans is becoming increasingly shaky. It becomes shakier with each leap in world oil prices or with each faltering in world economy, with crop failure or natural disasters, or with regional political - or trading conflicts.
   Already, many of the heavily indebted developing nations are near or over prudent lending limits at least traditional prudent lending limits. Fears of default on loans have already panicked lenders to renegotiate later repayment dates, or even give new loans to prevent default. The international banking and lending system cannot afford total loss of confidence from several big loan defaults.
   It is only because OPEC nations have been recycling around $120 billion a year in surplus oil money in world banking investments that there has been enough monetary liquidity in international lending institutions to finance the trading deficits of so many nations.
   "But," asks a West German central bank official, "will the oil-exporting countries take part in bad risks? One must doubt from past experience how far they will go."
   What shocking power and leverage the major oil-exporting nations, as a bloc, wield among nations! Through their domination of oil exports and surplus oil money they have power, directly or indirectly, to determine what vulnerable nations will prosper and survive; in some cases even who can be ruined or starved if they don't act according to their outlook, goals or values.

Debt Risks or Starvation and Revolution

   Nations already on the debt-ridden worry list are most Central American countries, the Sudan and several other African nations. International lenders are afraid to let critical nations go under. Turkey, Brazil, India, Indonesia, Peru, Pakistan, Zaire and others have been allowed to reorganize repayments on existing loans for much later dates.
   As a group, developing countries spend about 30 percent of their export earnings on oil. Turkey will have to pay as much as 90 percent to satisfy fuel needs and loan repayments.
   In recent months, jittery international bankers have tended to shoo over-borrowed nations to the International Monetary Fund. But before extending any credit, the IMF frequently imposes a series of tough restrictions over domestic fiscal and monetary policies. Many nations simply do not want those strings attached.
   If nations cannot get new loans to finance their trade deficits, many will soon be forced to sharply curtail economic growth and imports. But for many food-short nations, a reduction in borrowing means a steep economic setback with attendant mass starvation and revolution. What a dilemma many nations are in!
   Whatever weather conditions in the years ahead, soaring energy prices and tightening fuel supplies by themselves have guaranteed that poor and hungry nations will become poorer and hungrier; rich nations will no longer be able to produce cheap food. Never have so many nations built such a false and fragile foundation of prosperity and "success"!
   Never has the world more needed a "strong hand" from someplace to show nations the way to true peace, abundant food production and lasting prosperity! That's precisely what the Bible reveals the Creator will do. That's the good news the only good news for the future!

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Plain Truth MagazineOctober-November 1980Vol 45, No.9ISSN 0032-0420
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