Rocketing price of food in a hungry

world brings riots, fear and conflict

Puneet Jindal thinks he knows about food
inflation — it means that his domestic servants
want an increase in their wages. The 44-year-old
real estate broker, a member of India’s ever-
expanding urban elite, is less clear about what is
causing prices to rocket — by as much 28 per
cent last month — but most economists believe
that part of the answer is found in his fridge.

“I definitely eat much more, both in terms

of quantity and quality, than my parents.
My father was a farmer and had a modest living,”
said Mr Jindal in his three-bedroom apartment
in one of Delhi’s better suburbs. “So my
philosophy in life is shaped by my upbringing; I
would like to enjoy all that I missed in my childhood and youth. And I would like my children to have all
the riches and comforts of life.”

The causes of commodity instability differ from country to country. In Venezuela and Sri Lanka,
isolationist policies are making a difficult set of conditions worse, while India’s creaking
infrastructure is believed by most to be the main cause of food inflation. Some economists even welcome
Chinese inflation because it will make that country’s goods more expensive and help to reduce its huge
trade surplus.

“On the supply side they include increased variability in weather, water scarcity, decreasing crop yields as
populations age in agricultural centres, and urbanisation. Increasing use of biofuels is also boosting
both demand and affecting food supplies. And meanwhile overall demand is going to continue to
rise. Large, populous nations are moving up the global growth chain, and as they do so their households
end up consuming more grain per person, which will stretch supplies.”

Indeed, while the overall growth in the population — set to rise from 7 billion this year to 9.5 billion by
2050 — is set to put huge strain on resources, it is the rising prosperity in the emerging world that is the
central factor in the food price equation. Two decades from now the E7 economies — China, India, Brazil,
Russia, Mexico, Indonesia and Turkey — are expected to be larger than the G7 — US, Japan, Germany,
France, Britain, Italy and Canada. As these populations become richer, they will consume more
food, in particular more meat, which is resource-intensive. This will drive prices higher.
Abdolreza Abbassian, chief economist at the FAO, said: “Asia is booming, Latin America is expanding.
Even African countries are growing. You have got growth going on which makes people richer which
makes them eat more and eat better food.”

Despite the worries, there is also cautious optimism that solutions can be found. ]Mr Abbassian said the
G20 was actively studying a range of measures to tackle the current spike in food prices and there was
scope for greater production from a lot of key countries, especially India and China.

“I am not a pessimist,” he said. “I do not believe we are heading for a catastrophe. What I say is that old
habits die hard. People are thinking about last time, and they think next year everything is going to be fine.
I think the second round of high prices will put a stop to that.”
http://www.thetimes.co.uk/tto/environment/article2871377.ece

13th February 2011

The rising prices of food have come about by the increased demand and reduced supply. This
article outlines the social context of the policy report. We need to bring in intensive food
production to increase the production of cereals for our consumption and to feed livestock in
order to support our increased demand for meat. Our diets have changed, and an increased
demand for these items in the richer countries has left poorer countries without sufficient food –
clearly showing that the poverty mentioned in the policy report is an important issue. This article
therefore outlines the social aspect of the need for sustainable food production.