The end of cheap food

[Guest guest]

The end of cheap food

 

 

 

Dec 6th 2007

 

From The Economist print edition

 

 

 

Rising food prices are a threat to many; they also present the world with an

enormous opportunity

 

 

 

FOR as long as most people can remember, food has been getting cheaper and

farming has been in decline. In 1974-2005 food prices on world markets fell

by three-quarters in real terms. Food today is so cheap that the West is

battling gluttony even as it scrapes piles of half-eaten leftovers into the

bin.

 

 

 

That is why this year's price rise has been so extraordinary. Since the

spring, wheat prices have doubled and almost every crop under the sun-maize,

milk, oilseeds, you name it-is at or near a peak in nominal terms. The

Economist's food-price index is higher today than at any time since it was

created in 1845 (see chart). Even in real terms, prices have jumped by 75%

since 2005. No doubt farmers will meet higher prices with investment and

more production, but dearer food is likely to persist for years (see

article). That is because " agflation " is underpinned by long-running changes

in diet that accompany the growing wealth of emerging economies-the Chinese

consumer who ate 20kg (44lb) of meat in 1985 will scoff over 50kg of the

stuff this year. That in turn pushes up demand for grain: it takes 8kg of

grain to produce one of beef.

 

 

 

But the rise in prices is also the self-inflicted result of America's

reckless ethanol subsidies. This year biofuels will take a third of

America's (record) maize harvest. That affects food markets directly: fill

up an SUV's fuel tank with ethanol and you have used enough maize to feed a

person for a year. And it affects them indirectly, as farmers switch to

maize from other crops. The 30m tonnes of extra maize going to ethanol this

year amounts to half the fall in the world's overall grain stocks.

 

 

 

Dearer food has the capacity to do enormous good and enormous harm. It will

hurt urban consumers, especially in poor countries, by increasing the price

of what is already the most expensive item in their household budgets. It

will benefit farmers and agricultural communities by increasing the rewards

of their labour; in many poor rural places it will boost the most important

source of jobs and economic growth.

 

 

 

Although the cost of food is determined by fundamental patterns of demand

and supply, the balance between good and ill also depends in part on

governments. If politicians do nothing, or the wrong things, the world faces

more misery, especially among the urban poor. If they get policy right, they

can help increase the wealth of the poorest nations, aid the rural poor,

rescue farming from subsidies and neglect-and minimise the harm to the

slum-dwellers and landless labourers. So far, the auguries look gloomy.

 

 

 

- - -

 

 

 

Full story:

 

http://www.economist.com/opinion/displayStory.cfm?Story_ID=10252015

 

 

 

OR: http://tinyurl.com/29docp

 

 

 

[Thanks to Pamela Rice and Ivu-veg-news]