An On-going Crisis: Rising Global Food Prices

Rising food prices are due to a complex set of factors: climate change resulting in poor harvests; increasing biofuel production; energy and fertilizer cost increases;, population growth; and food export restrictions in some countries.

Those most seriously affected are urban poor people in developing countries with little access to food and without croplands to sustain them, notes the report.

Strong linkages between food and energy markets are a key factor influencing food prices. Food production accounts for 10 – 15 percent of energy use in most industrial countries. This relates to fertilizer production and use, fuel costs, irrigation, and harvesting and processing of food crops.

Rising oil prices has also sparked greater interest in biofuels as well, leading to more food croplands being converted to biofuel feedstock production. Many studies on the food versus fuel issue have confirmed that and the loss of food production acreage eventually leads to high food prices. (See GLOBE-Net article ” Food versus Fuel – The Debate Continues“).

Favourable biofuel incentive programs, particularly in the United States and the EU have contributed to biofuel production increases, which have risen more than 500 percent globally over the last decade.

Biofuel production is not the only factor contributing to the loss of food production acreage. In parts of North and South America, there is a competition between land use to maize, wheat and other coarse grains or to grow soybeans for export to China.

Export restrictions on foodstuffs in more than 30 countries also have led to increased price volatility and rising food prices on the world markets.

This trend of higher food prices will strongly be felt among the poor people in developing countries that are largely dependent on food imports, which is the case with the majority of African states.

Such consumers spend more than 75 percent of their limited income on food, and rising import costs could make most available food stocks unaffordable. Also many consumers in developing countries have migrated to cities and no longer have access to self-sustaining croplands.

Globally, the number of undernourished people is estimated in excess of one billion and this number could rise as population growth increases the demand of food further. At the end of this decade, the prices for agricultural goods are likely to be 50 – 100 percent higher than at the beginning of the last decade.

As the biofuel production is still subsidized and the effects of the climate change will be felt stronger in the future, high and volatile food prices will stay a serious problem for us to face.

Large food corporations like Nestlé are concerned as well, being directly influenced by higher food prices and the linkage between food and energy markets.

As noted by Paul Bulcke, President and CEO of Nestlé, the world’s largest food company, for large food corporations such as Nestlé the direct competition between the food and the energy sectors for raw materials and for water is another concern.

The World Watch’s Vital Signs Online Trend Report is available online.

By Pia Hachulla

GLOBE 2014 – The ‘The Future of Global Food Security’ will be a major topic at GLOBE 2014, the next in the celebrated GLOBE Series Conferences on the business of the environment taking place in Vancouver Canada, March 26-28, 2014. Reserve your place now. Check here for more details.

Pia Hachulla is a full-time intern pursuing her Bachelor’s degree in Media and Cultural Studies at the Heinrich Heine University of Duesseldorf in Germany. Her internship, while in Vancouver, is focussed on public and media relations, research and journalism in the area of food security, food policy, sustainability and the green economy.