The sharp increase in food prices over the past couple of years has raised serious concerns about the food and nutrition situation of poor people in developing countries, about inflation, and—in some countries—about civil unrest. Real prices are still below their mid-1970s peak, but they have reached their highest point since that time. Both developing- and developed-country governmentshave roles to play in bringing prices under control and in helping poor people cope with higher food bills.
facts and figures behind the rising price of food across the globe
Sources of Current Price Increases:- High price of energy: Energy and agricultural prices have become increasingly intertwined. With oil prices at an all-time high of more than US$100 a barrel and the U.S. government subsidizing farmers to grow crops for energy, U.S. farmers have massively shifted their cultivation toward biofuel feedstocks, especially maize, often at the expense of soybean and wheat cultivation. About 30 percent of U.S. maize production will go into ethanol in 2008 rather than into world food and feed markets. High energy prices have also made agricultural production more expensive by raising the cost of mechanical cultivation, inputs like fertilizers and pesticides, and transportation of inputs and outputs.
- Demand Supply Mismatch: the growing world population is demanding more and different kinds of food. Rapid economic growth in many developing countries has pushed up consumers’ purchasing power, generated rising demand for food, and shifted food demand away from traditional staples and toward higher-value foods like meat and milk. This dietary shift is leading to increased demand for grains used to feed livestock.
- Blame weather: Poor weather and speculative capital have also played a role in the rise of food prices. Severe drought in Australia, one of the world’s largest wheat producers, has cut into global wheat production.
calls for policy actions
- comprehensive social protection and food and nutrition initiativesto meet the short- and medium-term needs of the poor;
- investment in agriculture, particularly in agricultural scienceand technology and in market access, at a national and global scale to address the long-term problem of boosting supply; and
- trade policy reforms, in which developed countries would revise their biofuel and agricultural trade policies and developingcountries would stop the new trade-distorting policies with which they are hurting each other.
