Der SPIEGEL

Der SPIEGEL

01/24/2008 05:58 PM

Our Hungry Planet

The Choice between Food and Fuel

Food prices are skyrocketing. Arable land is becoming scarce. And forests continue to disappear across the globe. The world must decide between affordable food and biofuels.

All it takes for Hans Dietrich Driftmann, a businessman from Germany's northern Holstein region, to explain the way the world works is a package of muesli -- or at least to explain the way his world, the world of agricultural markets, works.

Driftmann picks up a packet of "Köllns kernige Multikorn-Flocken" ("Kölln's Crunchy Multigrain Flakes") and reads out the list of ingredients: oats, wheat, barley and rye. Then he slips a set of price tables out of a plastic sleeve and does a couple of calculations to illustrate how the prices of the muesli's ingredients have changed: rye has gone up by 55 percent, barley by 70 percent and wheat 90 percent. The price of oats has also skyrocketed -- by 80 percent -- since the last harvest a year ago. This final figure is what really hits home for Driftmann.

For the last two decades he has been the CEO of Kölln-Werke, Germany's top producer of oats and a major player in the muesli market. It's an old family-owned company, founded in 1795 and headquartered in the town of Elmshorn, a place with a skyline dominated by enormous grain silos painted sky-blue. The silos are beacons for truck drivers approaching Elmshorn to unload their grain -- if they come at all these days.

Today Driftmann is grateful for every truck that shows up at his silos. This year's oats harvest, he says, was "miserable." His buyers search the whole world for grain, even in places like Finland and Australia. Price is almost secondary. "The problem is availability," says Driftmann.

Highest Inflation in 14 Years

He ought to be able to achieve significantly higher prices in the negotiations with the giant trading companies. He is convinced that a price hike of more than 20 percent is justified, but he also knows that consumers won't accept such a large increase. Not yet, at least. "We will see quite a few price increases in the coming years," says Driftmann.

This is a new experience for agricultural companies -- and presents a troubling outlook for millions of consumers. For decades, they have become accustomed to stable or even declining food prices. But in September, when consumer discount giant Aldi attracted nationwide attention with its memorable advertising campaign ("Aldi is here to inform you about upcoming price increases"), Germans knew that change was coming. Aldi then raised the prices of about 50 items in its stores, and other chains promptly followed suit.

Meanwhile, almost all supermarkets appear to have raised prices across the board: for bread and butter, milk and cheese, pork and poultry, noodles and chocolate, apple juice and beer. The growing wave of price hikes has pushed inflation to its highest level in 14 years.

Some of those who were born after World War II and never experienced leaner times may only now be learning that food does have a value, even an existential one. Suddenly they realize that food is in fact an indispensable resource, critical for life, and that they can no longer expect it to be available at all times and in all places -- especially not at guaranteed low prices.

Too Much Demand, Not Enough Land

When German Agriculture Minister Horst Seehofer, a member of the conservative Christian Social Union (CSU), opened this year's Green Week agricultural fair in Berlin last week, it was under a completely new set of assumptions. For decades, the industrialized world enjoyed the questionable luxury of producing far more milk, butter and wheat than its citizens could ever consume. The surplus was exported, provided buyers could be found, or was placed into indefinite storage or destroyed.

This folly has now come to an end. Europe's mountains of butter have been depleted, its grain silos emptied and its lakes of milk drained. "The era of overproduction is behind us," says Stephane Delodder, an agricultural specialist with Rabobank in the Dutch city of Utrecht.

Food prices are skyrocketing...
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Food prices are skyrocketing...

Worldwide flows of goods are shifting and becoming reorganized. For the first time, we are seeing the emergence of a truly global agricultural market driven by the underlying force of all economic activity: the scarcity of goods. Wheat supplies, for example, have reached a 30-year low. In only one year, inventories in the European Union have plummeted from 14 million to one million tons.

Given this situation, the meteorological forecast of a drought in Australia, an important

... as is the price for oil.
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... as is the price for oil.

wheat exporter, can trigger a minor earthquake on the world's futures exchanges, where commodities prices are constantly hitting new all-time highs. Nothing fuels the fantasies of commodity traders quite as effectively as a bushel of wheat or a hectoliter of rapeseed oil.

Of course, the current uproar over rising food prices revolves around a lot more than consumers paying a few extra euros for milk, cheese and bread. The real issue is how mankind will be able to feed itself in the future -- and at what price.

How can agriculture feed a world that grows by 80 million people each year? A world that is increasingly exposed to climatic extremes? And, most of all, a world that doesn't just need food for people and feed for livestock, but is increasingly consuming fuel derived from plants?

'Desperately Need a Good Harvest'

The problem is that there is too much demand and not enough land. In a world hungry for agricultural products, the dilemma is that each hectare of arable land can only be used for one purpose at any given time. Potatoes can't be grown where corn is cultivated. Where rye is grown, there is no room left for oats. And when rapeseed is converted into biodiesel, there is no seed left to produce rapeseed oil. This fundamental conflict drives up the prices for agricultural crops. There are growing fears that the world could soon face a food crisis, and that the current bottleneck could expand into widespread starvation.

"We desperately need a good harvest to ease the current situation," says Klaus Schumacher, chief economist at Toepfer International, a large agricultural trading company headquartered in Hamburg. "If that doesn't happen, we'll soon face a genuine supply problem."

Kölln CEO Driftmann's assessment of the outlook for agricultural production is even more skeptical, especially in developing countries where a large share of food products has to be imported and where many people live a daily struggle to survive. "I am afraid that we are slipping into a global food crisis," says Driftmann. "And I'm extremely concerned about it."

At the Global Economic Forum in Davos, Switzerland, which began on Wednesday, the world's elites have identified the scarcity of agricultural commodities as a critical global risk. "The world's food production system," say the forum's organizers, "is about to face a true test." The United Nations has already warned that food shortages could lead to unrest in some countries. In Mexico, for example, tens of thousands of people took to the streets a year ago to protest the explosion in the price of corn meal, a staple of the Mexican diet. This "tortilla crisis" signaled the beginning of the distribution battles the planet is about to face -- struggles over the most productive farmland, the most favorable supply contracts and the best seed.

The New Chinese Appetite for Meat

A debate is taking shape over how human beings will be able to secure the basis of their livelihood, and whether they should use genetic engineering, for example. What represents the most effective use of valuable agricultural resources -- as a source of food for the world or as fuel for our cars and trucks? Bread or gasoline? Or is it possible to have both: a full belly and clean-burning cars?

German farmers derive a certain sense of satisfaction from the current debate. Until recently, they were seen as a dying breed. They were ridiculed as the notorious recipients of Brussels' welfare bureaucracy, and as the beneficiaries of a peculiar market logic: The less land the farmers farmed, the more money they collected. Now, for the first time in many years, German farmers can enjoy the pleasant sensation of being in demand. In fact, they are even respected again -- and able to make money.

Farmers are investing again, taking out loans to buy additional farmland, build storage buildings and put new machinery in their barns. Food production -- still Germany's fourth-largest industry after automobile manufacturing, machine tool production and chemicals -- is suddenly turning into a growth sector. Gerd Sonnleitner, the president of the Germans Farmers Association, welcomes this "new form of liberation for farmers," now that supply and demand rule the market and buyers are setting prices once again.

Farming Has a Future

"I even got calls asking if I had any grain left for sale when I was sitting on my combine," says Hans-Jürgen Sandvoss, 57, referring to last year's harvest. He and his wife have been running their farm in Honerdingen, a bucolic little 17th-century village in the northern German state of Lower Saxony, for the past 26 years. The family has owned the farm for generations, and Sandvoss hopes that his son will keep the tradition alive. The son, 19, plans to complete a training program on a farm after he finishes high school, and then follow in his parents' footsteps and study agriculture. "Until recently, I advised him against becoming a farmer," says Sandvoss. But now he is encouraging his son to pursue his plan after all. Farming has a future once again.

Today's farmer can also act as a businessman. His portfolio consists of crops like wheat, rapeseed, rye, brewer's barley, corn, potatoes and sugar beets. The key to a farmer's success is being able to predict the demand for certain products and plant his fields accordingly, taking the requirements of crop rotation into account.

Most crops are rapidly becoming more dear.
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Most crops are rapidly becoming more dear.

The price of farmland has jumped considerably. The Bodenverwertungs- und Verwaltungsgesellschaft (BVVG), an agency in Berlin that leases and sells government-owned farmland, is reporting record profits. In the first half of 2007, the average market price of a hectare (2.47 acres) of agricultural land in the eastern state of Saxony-Anhalt was €7,400, a 23-percent increase over last year's price. Prices are even higher in western Germany. In the state of North Rhine Westphalia, for example, the asking price for a hectare of farmland can be as high as €25,000 -- and there are buyers to be found.

The cost of leasing farmland has also increased in the state and €1,000 per hectare is no longer a rarity. "Any farmer who enters into leasing negotiations nowadays has my sympathy," says Rüdiger Fuhrmann, an agricultural expert at NordLB, a major bank based in Hannover. Johann Kalverkamp, an agricultural consultant in Lingen, a city in Lower Saxony, has also noticed a rapid increase in land prices. "Land is the scarcest resource on earth," says Kalverkamp.

'Shortages Will Intensify Dramatically'

The fact is that arable land cannot be increased at will. Over the past three decades, the amount of arable land worldwide has stagnated at about 1.5 billion hectares (3.7 billion acres). While new agricultural land is being added in Russia or South America, more and more land is lost to residential and industrial development in Asia and Europe. In China, eight million hectares (20 million acres) of land under cultivation have vanished within a decade. For comparison, just under 12 million hectares (30 million acres) of land are currently used for agriculture in Germany.

These spatial limitations would be tolerable if the world's population wasn't growing at such a breathtaking pace. A person born in 1950 has experienced mankind more than doubling its numbers from 2.5 billion to 6.6 billion people today. If the population grows to nine or even 10 billion by 2050, "the world will see an enormous need for additional biomass produced in agriculture," warns Franz Josef Rademacher, a mathematician in the southern German city of Ulm. Rademacher, a member of the Club of Rome, believes that "shortages will intensify dramatically."

At the same time, millions of people are changing their lifestyles and eating habits. The new middle class in Shanghai, Hanoi and Jakarta, no longer satisfied with a diet of rice and beans, has a growing appetite for pizza and pasta, burgers and pork chops. Meat consumption has doubled in the last 25 years and continues to grow. Meat production, though, requires large amounts of feed. A hog farmer needs three kilos of feed to produce a kilo of pork, and for beef the ratio is even higher: seven to one. Vast amounts of water are needed to produce the grain that goes into feeding livestock. It takes about 900 liters of water to grow enough corn for one kilo of feed.

Feeding a Quarter of the World's Population

The impact of new eating habits is especially significant in China. In Mao's day, the Chinese diet was predominantly vegetarian. With growing affluence, the Chinese have expanded their menus considerably, adding large amounts of meat to dishes like their traditional noodle soup. The huge country will not be able to even remotely satisfy this growing demand with domestic resources. The People's Republic already lives well beyond its means today. China has a quarter of the world's population to feed, and yet it has only about 10 percent of its arable land. As a result, the country is steadily buying up the world's food resources. China now imports more than seven times as many soybeans as it did only a decade ago. Corn shipments from abroad increased by a factor of 15 in 2006 alone.

Paradoxically, it wasn't too long ago that China was an important exporter of food products. But that was when crude oil was still affordable and climate change was a topic that interested a handful of meteorologists at best. Nowadays, with the energy and climate crisis at the top of the political agenda, the Chinese, and the rest of the world, for that matter, see plant-based fuel as a way out of the environmental trap -- but at the price of agricultural commodities becoming scarcer and more costly.

Governments spend billions to promote the production of plants that can be used to produce fuel and the development of production capacity. Growing amounts of rapeseed are being refined into biodiesel while corn and sugarcane becomes ethanol. On Wednesday, the European Commission examined ways to implement its ambitious climate resolutions. Marian Fischer Boel, the European Union's agricultural commissioner, is convinced that if Europe hopes to achieve its goal of a 20-percent reduction in CO2 emissions by 2020, "there will be no getting around biodiesel and ethanol." The demand for plant-based alternatives to fossil fuels increases along with the price of oil -- with far-reaching consequences for consumers. The EU is calling for fuels to include at least 10 percent biofuels by 2020.

Snapping Up Land Across the Globe

When grain ends up in our fuel tanks instead of on our plates, food prices increase, as does the cost of feed such as corn silage and soybeans. Higher feed costs make it more expensive to raise livestock, which translates directly into higher prices for beef and pork. The price of oil -- OPEC in other words -- ultimately determines how much a pork chop costs at the supermarket.

The Americans, in particular, have high hopes for biofuel making them less dependent on oil-producing countries in the Persian Gulf region. US farmers produced more corn last year than they have since the end of World War II. Tim Recker, a 43-year-old Iowa farmer, says that he and his fellow farmers get as much as they can out of the ground. "We're farmers. Our goal is to produce, produce, produce."

At a recent lunch on Recker's farm -- the meal was steak and beans -- his mobile phone gave a quick buzz: a text message with grain prices. Recker receives similar text messages about three times a day, and the news is almost always good. He and his neighbors are experiencing their own, personal economic miracle. Brand-new grain silos are popping up in the fields around Recker's farm, shining, rocket-like symbols of their builders' faith in the future. Many Iowans already refer to their state as "the new Texas," as if biofuel could serve as a complete substitute for oil.

During harvest season, Recker drives his truck down a road along the Mississippi several times a day, carrying 27 tons of corn with each load. A major exporter has set up underground storage facilities next to the river. From there, the bulk corn is loaded onto freighters, which carry it down to New Orleans, where it is transferred to larger ships. From there the corn travels through the Panama Canal and to destinations around the world.

A Handful of Corporations

In places like New Orleans, it becomes clear that even in the America of high-tech companies like Google, Apple and Microsoft, the traditional agricultural industry still plays a powerful role -- and it's an industry in which a handful of corporations dominate the world market.

The largest is Cargill, a family-owned company from Minnesota founded in 1865. With its 158,000 employees and $88 billion (€60 billion) in sales, Cargill is in the same league with major international corporations like BASF, Samsung and Hewlett-Packard. In company literature, Cargill aptly describes itself as "the flour in your noodles, the salt on your French fries and the corn in your tortillas, the chocolate in your dessert and the sweetener in your soft drink."

Cargill, Archer Daniels Midland (ADM) and Bunge form the legendary ABC complex. No one who hopes to be a player in the global business of renewable commodities can get around dealing with at least one of these companies. The agricultural multinationals buy grain and oilseed from farmers and cooperatives, store it in their own silos and dry and process it. They ship their products through their own transfer terminals and charter fleets of freighters to dispatch them to every corner of the world. They grind wheat into flour, process soybeans into animal feed and -- currently an especially lucrative activity -- convert rapeseed into biodiesel. ADM operates Europe's largest biodiesel plant at the Hamburg harbor, where anyone driving past the facility is immediately engulfed by the penetrating odor of French fries. By controlling the entire process, from harvest to finished product, these conglomerates manage to secure the most profitable part of the value-added chain for themselves.

The focus of their business is shifting more and more to the southern hemisphere. Vietnam and Thailand, for instance, have become important rice exporters, Indonesia and Malaysia have developed significant plant oil production industries, and both India and China export large volumes of sugar.

No Enthusiasm for a Grain OPEC

The biofuel boom has also resulted in a renaissance for southeastern Europe, traditionally Eurasia's breadbasket. "The region around the Black Sea has enormous potential," Rabobank analyst Delodder says enthusiastically. Russia, for example, is fast becoming an agrarian superpower. At last year's Green Week, Russian Agriculture Minister Alexei Gordeyev pointed out that about 20 million hectares (49 million acres) of arable land are still fallow. Should Europe need anything, the minister assured his audience, Russia would deliver. But his idea of forming a "grain OPEC" with Ukraine didn't exactly meet with enthusiasm.

Agricultural conditions in Ukraine are at least as promising as they are in neighboring Russia. During World War II, the Nazis shipped Ukraine's "black earth" back to the German Reich by the ton. The soil is so fertile that Ukrainian farmers are often able to produce two harvests a year. It comes as no surprise that Ukraine and other former Soviet bloc countries are seeing a rush to buy agricultural land. In Russia, it has become fashionable among wealthy oligarchs to snap up large agricultural estates.

Most of these countries restrict land purchases to their citizens. Poland, on the other hand, is one of the few countries that allow foreigners to buy agricultural property. Jan Peters, a former grain dealer from the northern German town of Brunsbüttel, entered the Polish market in 1995. Since then, he and six partners have been farming a plot of more than 1,000 hectares (2,470 acres) in northern Poland. They own a third of the land and lease the rest.

In the beginning, Peters regretted the risky move. The soil on the former state-owned farm was depleted, and it took years to recondition it. "We have tough times behind us," says Peters, adding that the business is now doing quite well. Peters and his fellow investors bought the property for €300 a hectare. Nowadays, investors are willing to pay upwards of €4,000 a hectare. "People are constantly asking us if we're willing to sell." The Scandinavians, he says, have been especially persistent.

Bitter Struggle for Arable Land

A bitter struggle over the distribution of the best agricultural land has erupted worldwide, from Eastern Europe to halfway around the world in Brazil. Because of its mild climate, the large country straddling the Amazon is on its way to becoming the world's leading agricultural country. In the state of Goiás, which is one of Brazil's most important farming regions and roughly the size of Germany, agriculture has grown by about 7 percent a year since 1990. The country, already one of the world's top exporters of beef, soybeans, sugar, coffee and orange juice, still has enormous potential. "We can easily double our agricultural production," says Brazilian Agriculture Minister Reinhold Stephanes.

The biofuel industry has taken the minister by his word, replacing former soybean fields, grazing land for cattle and cotton plantations with sugarcane fields. In the region surrounding Rio Verde, Goiás breadbasket, sugar barons known as usineiros have bought up vast estates -- paying high prices for the privilege. "Only fools aren't selling," says Gomes de Moraes, a 47-year-old cattle rancher.

For five generations, Moraes's family has run the Campo Alegre farm, a jewel among Rio Verde's fazendas. Ancient mango trees provide shade in the courtyard of a house where the running water comes from a nearby stream. A few months ago, Moraes decided to give up his idyllic family home. After moving to the city with his wife, Moraes now spends his time managing his properties. He has leased the farm to a Brazilian and French consortium that plans to convert it into a giant sugarcane plantation. Campo Alegre will produce ethanol beginning in 2009. "They made me an offer that I couldn't refuse," he says.

Like the Poles, the Brazilians have welcomed foreign capital with open arms. Much of that capital flows into the country in the form of US dollars, and the lists of financial backers include many famous names. Billionaire investor George Soros and former World Bank President James Wolfensohn have acquired holdings in ethanol plants, as has AOL founder Steve Case. All of them are in Brazil hoping to turn a handsome profit, as well as to bask in the role of environmental activist. But the professional world has long harbored doubts over whether biofuel is as environmentally friendly as some believe.

Limited Economic Possibilities

In fact, there are now many critics of the industry, including the Organization of Economic Cooperation and Development (OECD), consumer organizations like Foodwatch, the German government's environmental expert council and even major food corporations like Nestlé. Their verdict on biofuel is devastating.

According to the OECD, expanded biofuel production will lead to "untenable strains" on the commodities markets "without yielding significant benefits for the environment." Foodwatch is convinced that the strategy, while benefiting farmers, will do nothing to protect the climate. Germany's environmental expert council says that the industry raises expectations that "fly in the face of accepted science." Nestlé CEO Peter Brabeck-Lemathe bluntly characterizes biofuel production as "environmental lunacy."

The environmental upshot is indeed disappointing. Much of the energy the farmers produce is offset by the amount of energy that goes into producing the plants in the first place. They consume fossil fuels to harvest plants, for shipping, for storage and drying, not to mention the energy required to produce pesticides and fertilizers. The economical possibilities are also limited. Even if the US's entire corn crop were converted into fuel, it would satisfy only about 12 percent of the demand for gasoline.

Can the Poor Afford to Eat?

In Germany, the rapeseed plant has displaced many other crops. Few farmers plant feed peas or beans anymore. Rapeseed fields, with their yellow flowers, take up the largest amount of space -- 1.7 million hectares (4.2 million acres), or about 60 percent more than in 2000 -- among renewable commodities. Some of the expansion comes at the cost of fallow land, green space and bogs -- in other words, natural CO2 sinks.

A simple calculation points out biofuel's less-than-stellar potential. To fill the roughly 100-liter (26-gallon) tank of an SUV, an ethanol producer has to process about a quarter of a ton of wheat. This is enough wheat for a baker to bake about 460 kilograms of bread, which has a total nutritional value of about a million kilocalories -- enough to feed one person for a year.

So are the SUVs of the rich ultimately consuming the bread of the poor? According to Lester Brown, the president of the Washington-based Earth Policy Institute, this question sums up the essence of a new clash between North and South. "The stage is clear for a conflict between 800 million car owners and the two billion people who represent the poorest of the poor worldwide."

The poor are the first to feel the painful effects of turbulence in agricultural markets. Some spend up to 80 percent of their disposable income on food. "The world's poorest people are especially hard-hit," says John Powell, the deputy executive director of the UN World Food Programme (WFP). The WFP is the world's largest humanitarian organization. It provides food to roughly 90 million people in places where the need is greatest: refugee camps, regions devastated by flooding and war zones. The WFP derives half of its funding from charitable donations and the other half from the contributions of UN member states. Much of the money goes to purchasing grain -- expensive grain. "We now need more money to achieve the same goals," says Powell.

Unable to Feed Their Own Families

He has mixed feelings about rising grain prices. On the one hand, higher prices on the world market enable farmers in Africa to sell their grain for more money, partly by doing business with the WFP. The organization buys about two-thirds of its food reserves in developing countries. On the other hand, it is part of a bitter reality in the developing world that even the rural population is often forced to supplement its harvests by purchasing additional wheat or corn. In some cases, farmers are unable to feed their own families with the crops they produce.

They are also plagued by another factor of uncertainty: Climate change makes every harvest a gamble, both in the developing world and elsewhere. In Australia, crop yields have remained well below long-term averages for the last three years in a row. In northwestern China, desertification is gradually consuming more and more agricultural land, with ground water levels declining by more than a meter a year in some areas. "China has acute problems with its water sources," a study by the US Department of Agriculture warns. Economists expect that the Chinese will have to develop other solutions to their water problem, probably by importing "virtual water," by which they mean grain.

Genetically modified crops are seen by many as the solution to coming food shortages.
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Genetically modified crops are seen by many as the solution to coming food shortages.

China already depends heavily on Brazil for its grain imports, and the two countries have signed extensive supply agreements. The world's pantry can apparently offer virtually unlimited capacity to satisfy Chinese demands -- but this comes at a high price for the rest of the globe. Ancient rainforests are being destroyed. As the agricultural industry expands its sugarcane plantations, soybean farmers are forced to move closer to the Amazon, where they buy land from cattle ranchers. The ranchers, in turn, burn down the rainforest to create new grazing land.

This illustrates how the scarcity of agricultural commodities contributes to the destruction of highly vulnerable vegetation zones, not just in the Amazon region, but also in Malaysia and Indonesia, where oil is derived from the fruit of palm trees. Environmental activists refer to the product as "clear-cutting diesel." According to Paulo Adario of Greenpeace Brazil, "the rainforest burns when the prices of soybeans and ethanol go up."

New Approaches

Nothing illustrates more clearly than slash-and-burn deforestation how valuable and scarce fertile soil is and will remain, as long as the demand for agricultural commodities continues to grow. If agriculture hopes to even come close to satisfying global demand, it will have to find new approaches.

Depending on the development of even more powerful and efficient machines will hardly do the trick. Technology is not expected to yield any significant advances anymore. Fifty years ago, it took a farmer 30 hours to harvest his crops on one hectare (2.47 acres) of land. Today a combine can complete the same task in 20 minutes, and it can harvest 60 to 70 tons of wheat an hour -- enough to provide medium-sized city with a day's worth of bread. The real challenge will be to maximize crop yields on limited amounts of arable land.

The world has faced a similar challenge once before. In the 1960s, underdeveloped nations began using agricultural technology to combat poverty and hunger. Farmers bought improved seed, especially hybrid varieties, and used fertilizer, pesticides and more efficient irrigation systems. Between 1970 and 1995, farmers in Asia managed to double their yields, even though the amount of land they farmed grew by only 4 percent. In those days, the phenomenon was dubbed a green revolution.

Today there is renewed talk of a revolution, a second green revolution, but this time it has been triggered by genetic engineering. Scientists have developed technologies to make crop plants resistant to pests or immune to weed killers. These interventions promise higher yields and better quality, and in doing so they offer the promise of solving the global food problem -- but only as long as this is what the world wants.

In an industrial zone in the southern part of Gent, in Belgium's eastern Flanders region, Bayer CropScience operates a laboratory where 120 researchers are developing the plants of tomorrow. They are plants designed to withstand virtually any form of stress -- plants that will not wither during dry periods, will not wilt in the heat and will be capable of surviving floods -- in other words, plants that are capable of surviving the effects of climate change.

Michael Metzlaff, a scientist at the Gent facility, uses a plastic card to gain access to the inner sanctum, a room filled with shelves of labeled preserving jars, each containing a seedling. The seedlings look like normal rapeseed plants, but these specimens are everything but ordinary. Metzlaff has deliberately inhibited the activity of specific genes in the plant that normally consume a lot of energy in response to stress, thereby damaging the plant. The process, known as "gene silencing," suppresses this automatic behavior.

'Normally Fatal'

According to Metzlaff, crop yields went up by almost 40 percent when these test plants were used in the field. He subjected the plants to stress tests, including nine days of temperatures of 45 degrees Celsius (113 degrees Fahrenheit), followed by two days of complete dryness. "This would normally be fatal," he says, but not for the genetically engineered plants. They thrived, while the control plants withered and died. His high-stress rapeseed plants will have to pass an entire series of field tests, and Metzlaff estimates that it will take eight years before the plants are ready to be marketed. At that point, the question remains whether government agencies, especially in Europe, will even grant licenses for the genetically modified (GM) plants.

For years the European Union has adopted a restrictive stance on GM plants, unlike the governments in Canada, Brazil and the United States, where farmers use GM products as a matter of course. Worldwide, GM plants already grow on more than 100 million hectares (247 million acres), or 7 percent of all area under cultivation. The technology is especially common with soybean, corn and cotton plants. But so far Europe has been passed over by the genetic wave.

Europeans are highly skeptical of all products originating in genetic laboratories. Critics at Greenpeace warn of unpredictable consequences when plants and animals are genetically modified. They argue, for example, that manipulation can lead to allergic reactions, that growing GM plants jeopardizes natural diversity and that the consequences have not been sufficiently studied. Bayer researcher Metzlaff has little patience for these arguments. He says that humans have cultivated and bred plants for centuries. In the past, the success of their efforts depended on chance, whereas today's geneticists can precisely instill plants with desirable attributes. "This can speed up the work by years," says Metzlaff.

The domestic livestock industry is already feeling the effects of European reticence. The prices of animal feed have risen drastically, partly because imports of corn gluten from the United States have practically ground to a halt. The EU practices a policy of zero tolerance, banning the importation of anything that is not licensed in Europe. This begs the question of how long Europe can afford this solo effort. The second green revolution is already underway everywhere else, says Michael Schmitz, an agricultural economist in the central German city of Giessen. He is convinced that Europe will change its position sooner or later.

Decades of Shortages?

Schmitz has observed the global agricultural markets for years. Thanks to a complex computer program he and his research team have developed, the professor can even steal a glimpse into the future. The program simulates what happens when the agricultural conditions change -- as is currently the case.

To run the program, Schmitz feeds vast amounts of data into the computer, including population growth and income development figures, as well as columns of numbers relating to the production, consumption and costs of agricultural commodities. In a probable scenario, demand will continue to rise, because emerging economies like China, India and Indonesia still have a lot of catching up to do. "We have to get used to the idea of a prolonged phase of rising prices," says the professor.

How long would it last? Although Schmitz doesn't want to pin himself down, he says that the current shortages are not a phenomenon that will end in a few months -- or even in a few years. Schmitz predicts: "This could continue for two or three decades."

By Alexander Jung, Jens Glüsing, Frank Hornig and Wieland Wagner

Translated from the German by Christopher Sultan

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