Global Food Prices Rise to New Heights

[sharon sanders]

Global Food Prices Rise to New Heights
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food price inflation as a top priority for policymakers at the local, national, and international level. The price of cereals such as wheat, rice and corn has risen by 50%, while the cost of dairy products, oils, and fats has increased by an even higher percentage (see Figure 1 below).

While rising food prices can have economic impacts across all segments of the population, the results are felt most acutely by the global poor. Nearly three billion people earn less than $2.00 a day and spend, on average, well over one-half of their household income on food. The urban poor, who typically do not produce their own food, are particularly vulnerable to price fluctuations.

Figure 1. FAO Food Price Index: February 2007 - January 2008

Figure 1. FAO Food Price Index: February 2007 - January 2008​

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Source: FAO, 2008​

Food aid agencies are feeling the pinch, too; last week, Josette Sheeran, the head of the United Nations' World Food Program, reported that global food reserves were at their lowest level in 30 years and the agency faces a $500 million shortfall in 2008.
Some of this inflation can be attributed to short-term production shortfalls. But many of factors driving food price increases are more lasting, and their effects are likely to be felt for several years at least. The European Bank for Reconstruction and Development, along with the Food and Agriculture Organization of the United Nations, identified the following root causes for food price inflation in 2007:

• Agricultural subsidies in developed countries that make more efficient production in developing countries unprofitable;
• Decreases in food stocks;
• Rising fuel prices;
• Increased demand for some products, such as meat, particularly in rapidly emerging markets such as China and India;
• Growth in biofuels production (see figure 2 below); and
• Speculation in agricultural commodity markets.

Global population increases and climate change are also contributing to rising prices. The global population is expected to exceed 9 billion within the next 50 years, and simultaneously the impacts of climate change are predicted to reduce agricultural productivity by as much as 50% in some parts of the world, most notably sub-Saharan Africa.

Figure 2: World Ethanol Production, 1975-2005

Figure 2: World Ethanol Production, 1975-2005

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Rising demand for biofuels, used in both ethanol and biodiesel production, has pushed up prices of commodities such as corn and rapeseed. Around 30% of the United States' corn production will be used to produce biofuels by 2010.​

Source: EarthTrends, 2007 using data from Earth Policy Institute, 2006.​

Many the causes mentioned above will require major, concerted global action to address. In the meantime, policymakers are considering a variety of more immediate actions. UN Secretary General Ban Ki Moon emphasized the growing importance of investing in a “green revolution” for Africa in a speech this week. Additionally, the EBRD and the FAO convened a panel of experts in London on Monday to explore the potential of increasing agricultural production in eastern Europe. Up to 13 million hectares of agricultural land in countries such as Russia, Kazakhstan, and the Ukraine could potentially be placed back into production.

RELATED LINKS:
BBC News: The Cost of Food, Facts and Figures
Washington Post: UN Warns about High Fuel, Food Costs
EBRD and the FAO: Fighting Food Inflation

EarthTrends Links
Can a Green Revolution Catalyze African Development?
Global Biofuel Trends
Agricultural Trade Reform and Poverty in the Developing World
Searchable Database: Food Production Index

Source for this analysis:
http://earthtrends.wri.org/updates/node/292[FONT=&quot]<o></o>[/FONT]
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[Treyfish]

Re: Global Food Prices Rise to New Heights

<TABLE class=lan18 cellSpacing=0 cellPadding=0 width="97%" align=center border=0><TBODY><TR><TD class=hei22 vAlign=bottom height=25>Food security first
</TD></TR><TR><TD bgColor=#ffffff height=4></TD></TR></TBODY></TABLE><TABLE cellSpacing=0 cellPadding=0 width="50%" align=center border=0><TBODY><TR><TD height=8></TD></TR></TBODY></TABLE><TABLE cellSpacing=0 cellPadding=0 width="97%" align=center border=0><TBODY><TR><TD width="48%">www.chinaview.cn

2008-04-16 10:12:17 </TD><TD class=hui12 align=middle width="26%"> </TD><TD class=hui12 align=middle width="12%">

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BEIJING, April 16 -- In his inspection tour of a grain production area in North China last week, Premier Wen Jiabao used a quote from the late Chairman Mao Zedong: "With enough grain reserves ready, our heart will be at ease." We see the unprecedented importance the central government has attached to agriculture development and grain production.
Premier Wen assured the people and the world that China had enough grain reserves and that it could feed its own population. As Wen said, a country with a population of 1.3 billion makes the biggest contribution to the world by feeding its population on its own.
Authorities from the State Administration of Grain reiterated on Monday that grain supply was not a problem with ample reserves, and that China would very likely have another bumper harvest, the fifth consecutive increase in grain output in the past three decades.
In the backdrop of soaring food prices worldwide and the warnings by the United Nations and the World Bank against a looming food crisis, the stability of food supply and agricultural production in the world's most populous nation is of particular significance to the food security of the entire world.
But it may not be wise to ignore a possible imbalance between supply and demand in the future. It may not always be plain sailing in the long-term development of agriculture.
An old Chinese saying goes: "One must take a long-term view of the deficiency in the future even when the supply is more than enough, and it would be too late to regret a state of unpreparedness when one is faced with scarcity".
As Nie Zhenbang, director of the grain administration, suggested in his signed article in People's Daily on Monday, we have an uphill battle ahead to keep the balance between the supply of grain and its demand in the years to come, with the dwindling of fresh water resources and arable land.
In such circumstances, the importance of keeping our existing farmland from being eroded away by construction projects and urban expansion can never be overestimated. So we need stricter and harsher penalties for those officials who dare to occupy farmland without approvals from the central government.
In addition, we cannot afford a more polluted ecological system, which will further deplete the already deficient fresh water supply for agriculture use. We should not sacrifice self-sufficiency in food supply for urbanization and business growth. The lowest grain reserves in decades and soaring food prices in many parts of the world should further increase our urgency to do a better job in promoting agriculture development.:tiphat:

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