Posts Tagged ‘food price’


2007-2008 Food Crisis: Causes, Responses, and Lessons Learned

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By Jameson Spivack

The world food crisis of 2007-2008 caused a substantial rise in the cost of food, especially staple foods such as rice, wheat, and corn. This rise in price had a devastating effect on hungry people in the developing world.

When food prices rise, poor people in developing countries are hurt the most. (Image source: IFPRI)

Between 2005 and 2011, world prices for rice, wheat, and maize rose 102 percent, 115 percent, and 204 percent, respectively, according to the UN Food and Agriculture Organization (FAO). With price increases, people with less disposable income must spend a larger percentage of their earnings on essential staple grains, and less on other food and non-food items. This can have a significant impact on nutrition.

In seven Latin American countries, this increase in price led to an average 8 percent decrease in the amount of calories consumed. Before the crisis, 35 percent of households in Ecuador received an adequate amount of calories; afterwards, only 22 percent were receiving healthy levels of calories. In developing countries, if prices rise 50 percent across the board, and there is no rise in income, iron intake will decrease by 30 percent, according to the International Food Policy Research Institute (IFPRI). In the Philippines, this 30 percent decrease in iron consumption would mean that only 5 percent of women have adequate levels of iron.



Food Price Instability hurting millions

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By Bryan Dorval

Rising food prices represent a major threat to food security in developing countries. Hardest-hit are the poor, who often have to spend up to 70 percent of their income on food. According to the World Bank , in 2010-2011 rising food costs pushed nearly 44 million people into extreme poverty and recent price hikes could lead to an additional 30 million more.

The smallest rise in food prices can be a huge burden to bear for many farmers in developing countries. (Photo credit: Bernard Pollack)

There are many causes to the latest spike in the cost of food, according to the World Bank’s Food Price Watch including changing weather patterns, the increase in the demand from emerging economies, and the growing production of agrofuels.

The food crisis is also intimately linked to the current economic crisis—food and agriculture have become heavily dependent on oil. With the markets in flux and ongoing conflicts in regions where petroleum is widely produced, oil has steadily increased in price. The rise in the price of oil has had a direct impact on the rise in the cost of basic foods.  According to The World Bank, when the price of oil is over fifty dollars a barrel, a 1 percent price increase in oil causes a 0.9 percent increase in the price of corn.

With poor families in developing countries spending large percentage of their incomes on food, the smallest rise in food prices can be a huge burden to bear. The food price index, the measure of the monthly change in international prices of a basket of food commodities, showed a small dip of 1 percent in September, but it is still 19 percent above its September 2010 levels.



New IATP Report Shows Excessive Speculation Hurts Farmers and Increases Hunger

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By Kim Kido

A recent report published by the Institute for Agriculture and Trade Policy (IATP) describes how and why speculative trading has caused agricultural commodity prices to fluctuate wildly, irrespective of actual supply and demand. The report shows how such price fluctuations negatively impact farmers and consumers, and supports regulations that would stop this from happening.

Food price speculation often give farmers confusing and misleading information that can cause over sowing or under cultivation. (Photo credit: Bernard Pollack)

According to the report, when the price of a commodity crop like wheat is high, for example, a farmer might want to plant wheat on all of his fields. But there are several months between planting and harvesting where the price of wheat may fall. Farmers in such a situation have historically relied on hedging – selling the right to buy the crop in the future for the current price – to minimize the risk of losing everything should the price dive at harvest time. Speculators, on the other hand, aim to profit by betting on which direction an asset will move in the future. Deregulation has led to increasing speculation by institutional investors without a direct interest in the commodities, resulting in volatile prices that do not reflect supply and demand. The report points to this excessive speculation as a major cause of the 2008 food crisis, when food-price riots broke out in 30 countries.

One might expect increasing food prices to benefit farmers, but the report finds this is often not the case. Price changes over a short amount of time “send out confusing, misleading and often completely wrong price signals to farmers that cause over sowing in some phases and under cultivation in others”, writes Jayati Ghosh of the World Development Movement, one of the contributors to the report. When there are benefits, they tend to go to marketing intermediaries instead of farmers.



Mapping world food price volatility

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What if you could click on a map and find out why food prices are so high in Ethiopia, Kenya, or Niger?

The “food price pressure points map”, developed by Oxfam USA as part of the GROW campaign, allows viewers to see how food price volatility is impacting consumers and farmers across the globe.

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What do you think about this interactive map? Tell us in the comments section!