Rising Food Prices
Posted on Monday, January 4th, 2010
The rapid rise in food prices has been a burden on the poor in developing countries, who spend roughly half of their household incomes on food. These soaring prices have triggered world-wide concern about threats to global food security and the nutrition situation of poor people in developing countries.
In 2007 the food price index calculated by the Food and Agriculture Organization of the United Nations (FAO) rose by nearly 40 percent, compared with 9 percent the year before, and in the first months of 2008 prices again increased drastically.
In a country like India, food prices are a top concern because more than half the population (of over a billion people) lives on less than two dollars a day. These poor people spend much of their income on food, and there are concerns that higher prices could expose them to malnourishment.
India is the world’s second biggest producer of food grains such as wheat and rice, and usually grows enough to feed its massive population. Food prices in India have risen to a high of nearly 20% over last year, the highest rate in a decade. The prices of pulses, milk, wheat and rice – and vegetables like potatoes – have risen sharply. Potato prices have gone up by 136% and pulses have risen by over 40% over last year.
One emerging factor behind rising food prices is the high price of energy. 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.
At the same time, 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.
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.
Many countries are taking steps to try to minimize the effects of higher prices on their populations. Argentina, Bolivia, Cambodia, China, Egypt, Ethiopia, India, Indonesia, Kazakhstan, Mexico, Morocco, Russia, Thailand, Ukraine, Venezuela, and Vietnam are among those that have taken the easy option of restricting food exports, setting limits on food prices, or both. For example, China has banned rice and maize exports; India has banned milk powder exports.
How effective are these responses likely to be? Some of these actions that governments are taking are likely to help stabilize and reduce food prices. On the other hand some of the proposed solutions may help certain groups at the expense of others or actually make food prices more volatile in the long run and will seriously distort trade. What is needed is more effective and coherent action to help the most vulnerable populations cope with the drastic and immediate hikes in their food bills and to help farmers meet the rising demand for agricultural products. Any long-term strategy to stabilize food prices will need to include increased agricultural production, but price controls fail to send farmers a message that encourages them to produce more.
World agriculture is facing new challenges that, along with existing forces, pose risks for poor people’s livelihoods and food security. Jacques Diouf, director general, FAO in the Global Food Crisis Summit organized recently by the FAO in Finland mentioned that the “structural solution to the problem of food security in the world lies in increasing production and productivity in the low income, food deficit countries”. He added, “This called for innovative and imaginative solutions including partnership agreements between countries that have financial resources, management capabilities and technologies and countries that have land, water and human resources.”
Sir Albert Howard’s inspirational work “The Waste Products of Agriculture” deals in part with Nutrition and the need to return to the soils that which we consumed as food. We must adopt and incorporate the Ecological Sanitation model he described in his book. These provisions are essential for a world consuming its mined phosphate and potassium resources at an alarming rate, and where extensive agriculture has created the nightmare of GM.
Shortage of these fertilizer materials is driving prices ever highter and Howard wisdom is needed at this time.