Food Security
After a relatively stable nominal food prices on the world markets during the years 1974-2005 and a gradual decline in their real price by an astounding 75%, a combination of several factors since 2005 brought a sharp increase in food and feed prices at accelerating rates that reached crisis proportion in mid-2007.
According to different articles and reports, several factors have contributed to the rise in the price of grains and other food products. The buoyant global economic growth and the exceptionally rapid growth and the rise in the standard of living certain countries are among others.
The demand-driven boom concentrated in particular in the emerging economies, most notably in China, India, Brazil and the Middle East, and their unprecedented growth and vigorous industrialization increased also their demand for oil and raw materials as an effect of the rise in the number and use of vehicles, their more capital intensive production methods, their urbanization and higher incomes that increased also their use of electricity and their consumption of high-valued products.
The most fiercely controversial factor that contributed to the rise in food prices is the demand for bio-fuel. In the US bio-fuel is produced primarily from corn and it set a target of producing 7.5 billion gals of renewable fuel use in gasoline by 2012. In the EU total biofuels production in is smaller and 80% is bio-diesel produced from rapeseed, soy and increasingly also from palm oil imported from East Asia. Production of bio-fuel is driven by generous incentives given to farmers that grow corn for ethanol in the and soy and rapeseeds for bio-diesel in the EU. Both the US and the EU set high targets for the production of bio-fuels in the next decade, but the worsening food shortages and the heated controversy about their environmental impact force policy makers to take another look at these goals.
As a result of all these developments, the dollar prices of staple foods rose, in 2006 and 2007, by over 40 percent. The main rise was in grain prices and some of them, particularly the prices of wheat and rice nearly tripled in the last year alone and the prices of corn and soybeans nearly doubled. The rise in food prices and in the price of oil put an upward pressure on inflation in nearly all countries.
source:http://topics.developmentgateway.org/foodsecurity/index.do
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