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In Search of Cheap Food: Prices for Cereal, Cookies and Hundreds of Other Items in Your Grocery Store Depend Increasingly on an Oil Harvested Half a World Away.
Sunday, November 30, 2008 5:55 AM


(Source: Star Tribune, Minneapolis)trackingBy Matt Mckinney, Star Tribune, Minneapolis

Nov. 30--ORO PROVINCE, PAPUA NEW GUINEA

Ezekiel Asimba's 25-acre farm lies deep within a tropical rainforest, within view of an active volcano, but the palm oil that he and other growers produce will leave this remote island on cargo ships owned by Minnetonka-based Cargill Inc., destined for grocery store shelves around the world.

The quest for cheap food has helped transform palm oil from an inexpensive cooking oil used mostly in developing nations to an all-but-invisible staple of the western diet. But with an ever larger portion of our food now coming from the farthest corners of the globe, the price we pay at the grocery store is more and more tied to events beyond our control.

That was made especially clear in 2008, when sharp increases in the price of palm oil and dietary staples such as wheat, rice, corn and soybeans seemed to herald a new era of higher food prices. In U.S. supermarkets, it meant the biggest rise in grocery bills in nearly two decades. Elsewhere, food riots broke out and the Haitian government fell as suddenly higher prices unleashed a desperate scramble for food.

Some blamed the global crisis on demand from China and other fast-growing nations. Others faulted government-imposed biofuel mandates, which encouraged farmers to take some crops out of the food chain. And still others directed their ire at hedge funds and financial speculators, who had turned food into an investment, or at food companies such as Archer Daniels Midland, Bunge and Cargill, which booked record profits as others starved.

All those forces came into play in the price of palm oil this year. And while prices for it and other commodities have retreated from summer highs, most experts worry that higher food costs and shortages may become more frequent in the coming decades. A U.N. estimate warns that the world must grow 50 percent more food by 2030 just to keep up with global population.

Palm oil is the most widely used vegetable oil in the world. It's found in Nabisco's Oreos, General Mills' breakfast bars and Brach's Maple Nut Goodies made by Round Lake-based Farley's & Sathers. U.S. consumption of palm oil has tripled from 324,000 tons in 2005 to 1 million tons today. By one estimate, one in 10 products in a U.S. grocery store contain palm oil.

"It's pretty ubiquitous," said Duke Seibold, technology director for General Mills. "It can be used in ramen noodles, croissants; it has a very wide application."

Besides food, it's a source of biodiesel, industrial cleaners, soaps, toothpaste and cosmetics.

It's use in processed food doesn't require hydrogenation, a process that produces trans fat, an unsaturated fat linked to heart disease.

But it's chief virtue is that it is cheap. The oil palm trees that produce the plum-sized drupes are a wonder of biology. They produce more vegetable oil per acre than any other crop, by far. Coconuts produce about half as much oil per acre, and canola and soybeans a mere tenth of that amount.

That high yield is a primary reason why palm oil usually costs a quarter to a third less than soybean oil.

This year, the world's farmers are on track to produce more than 43 million metric tons of palm oil, with more than 80 percent coming from a thin crescent of islands between the Indian and Pacific oceans.

Cargill has grown oil palms -- the trees that produce the fruit from which palm oil comes -- for more than a decade in Indonesia, where since 1995 it has had a single plantation on the island of Sumatra. Then in 2005, Cargill bought the British government's palm oil operation, which included three massive plantations and a processing plant in Papua New Guinea.

From the air, Cargill's plantations form a checkerboard on the jungle terrain of Papua New Guinea, an island northeast of Australia, bigger than California. Dark green squares mark off the acres of palm trees.

Cargill workers in blue coveralls stomp through the plantation, their boots falling with soft thuds on the jungle floor. Palm trees tower over them, the fronds a canopy that block out the August sky. The men kneel down and pluck the deep-red palm fruit that has fallen to the ground, sweeping them into piles and tossing the piles into a large container.




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