Storm Warning

When all goes well, thunderheads tower above India's southwestern state of Kerala in early June, drenching the region's vital rice fields and ensuring a bountiful harvest. From there the summer monsoon plods northward to soak the baking plains and irrigate vital breadbasket regions that feed 1.1 billion people before arriving at the foot of the Himalayas in August. Forecasting this complex meteorological process has always been an obsession within India, but this year the world will be watching. Changes in the monsoon cycle can shrink India's total grain harvest by up to 20 percent, creating a shortfall of 30 million metric tons. During India's last crop failure, in 2002, the country had a massive reserve to fall back on. "Now," says Usha Tuteja, an agricultural economist at Delhi University, "we don't have enough buffer stocks to make up for one bad year."

India isn't the only danger zone today. A major storm battering the Philippines or Bangladesh at the wrong moment, a pest or plant-disease outbreak in Vietnam, or floods along China's Yangtze River like those that occurred in the mid-1990s would put serious strains on global grain reserves already depleted to levels not seen since the 1970s. Global markets are behaving as if a food shock is imminent.

In recent months the commodity prices of rice, wheat and corn has jumped 50 percent or more, pushing retail prices to levels unseen in a generation and prompting grain-exporting countries to curtail trade to suppress domestic inflation. On March 20, the World Food Program issued an emergency appeal for more funding to keep aid moving to the world's poorest countries. Last week World Bank president Robert Zoellick called for urgent global action on the part of rich nations "or many more people will suffer or starve."

Experts blame a variety of factors for today's food crunch. Poor harvests in Europe since 2005 and Australia's ongoing drought have crimped the pipeline of staple grains to world markets. Soaring demand for bio-fuels in response to $100-per-barrel oil is diverting crops. And the rise of Asia's twin giants—China and India—is turning them both into market-moving grain hogs. Add to that climate change and a decline in agricultural investment as a percentage of GDP worldwide, and there's little mystery to why food security is a pressing issue from Tokyo to Abidjan. "We're paying the price of complacency," says biologist Robert Zeigler, head of the Philippines-based International Rice Research Institute.

The immediate crisis is one of confidence. As governments with grain surpluses tighten their grip on reserves, countries that rely on imported staples are scrambling to secure supplies. Driven partly by speculation, commodities markets have seen the per-ton cost of rice, wheat and corn surge by 50 percent or more since mid-2007. There are real supply issues, to be sure. But experts blame governments that inhibit grain flows, speculators betting on price spikes and fearful consumers who buy 10 sacks instead of one at the local markets for making the problem worse than it needs to be. When the United Nations' World Food Program issued an "extraordinary emergency appeal" to fill a $500 million funding gap last month, executive director Josette Sheeran said it was the first ever issued over a "market-generated crisis."

Unfortunately the government response is making the market squeeze worse. Richard Barichello, an economist at the University of British Columbia, argues that countries that have recently slapped new controls on exports—including India, Vietnam, Egypt and Cambodia—are putting politics ahead of economics. "It's a beggar-thy-neighbor policy," he says, that reduces incentives for farmers to grow more and leads to black marketeering.