World Food Crisis
The developing world is facing a severe food crisis. Hunger is affecting the developing world in a way which has not been seen for decades. World food prices are at a level that has never been reached before. These prices, which had risen dramatically in 2008 eventually, came down in 2009 but to a point which was nonetheless higher than any other year after 2008. Food riots have emerged in numerous third world countries; rising food prices has been the last straw in the Arab world rocked by popular uprisings.
When the price of food increased in 2008, the president of the United States at the time, George Bush, attributed to the recovering living standards in India and China. As people become better-off, their diet changes from the simplicity of food grains to animal products such as chicken and meat. These animal products use grains as feed, the direct and indirect use of food grains per capita rises with per capita income. President Bush’s excuse was that fast growth in per capita incomes in India and China has therefore formed excess demand pressures in the global food grains market, resulting in the price increase. An identical argument is now reportedly advanced due to the deputy chairman of the Indian Planning Commission, who attributes the present food price inflation in India to the increasing prosperity of the country.
Speculation is an important contributory factor but speculation can undoubtedly create an inflationary upsurge out of nothing, it typically works on an underlying demand-supply imbalance, highlighting its consequences. Therefore the underlying output and demand trends must be looked at. This is where two astonishing facts have been stumbled upon.
Firstly, per capita cereal output, and also food grain output, has drastically declined as a whole since the eighties. In 1980-1985, the average annual capita cereal output was three hundred and thirty-five kilograms. For 2000-2005 it was three hundred and ten kilograms. This decline in
When the price of food increased in 2008, the president of the United States at the time, George Bush, attributed to the recovering living standards in India and China. As people become better-off, their diet changes from the simplicity of food grains to animal products such as chicken and meat. These animal products use grains as feed, the direct and indirect use of food grains per capita rises with per capita income. President Bush’s excuse was that fast growth in per capita incomes in India and China has therefore formed excess demand pressures in the global food grains market, resulting in the price increase. An identical argument is now reportedly advanced due to the deputy chairman of the Indian Planning Commission, who attributes the present food price inflation in India to the increasing prosperity of the country.
Speculation is an important contributory factor but speculation can undoubtedly create an inflationary upsurge out of nothing, it typically works on an underlying demand-supply imbalance, highlighting its consequences. Therefore the underlying output and demand trends must be looked at. This is where two astonishing facts have been stumbled upon.
Firstly, per capita cereal output, and also food grain output, has drastically declined as a whole since the eighties. In 1980-1985, the average annual capita cereal output was three hundred and thirty-five kilograms. For 2000-2005 it was three hundred and ten kilograms. This decline in