Food prices

Food crop prices are expected to remain high in 2008 and 2009 and then begin to decline as supply and demand respond to high prices however, for most food crops, prices are likely to remain well above 2004 levels through 2015 (World Bank 2008d). 

The overall policy response to rising food prices should be multisectoral and should generally encompass improving grain price policies production, transport, and logistics safety nets to improve food security at the household level nutrition programs and management of the macroeconomic consequences of both the food price increase and the costs 

Safety net programs play a triple role in response to rising food prices  

FOR PROTECTION AND PROMOTION THE DESIGN AND IMPLEMENTATION OF EFFECTIVE SAFETY NETS 

Unfortunately, many more countries have much less adequate initial safety nets. Their systems provide partial, fragmented, or inefRcient safety nets as in Haiti and Malawi. Some countries, such as Mozambique and Sierra Leone, may have little in the way of existing safety nets. In such cases adequate responses are much more constrained and are likely to involve significant trade-offs between speed of response and coverage and other desirable features of good safety nets, especially equity, efficiency, and sustainability. 

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The Bangladesh famine of 1974 occurred during a period when the amount of food available per person in that country was at a peak. It was unemployment, hoarding, and inflated food prices that drove millions to their death. 

We can hardly think of a better example to illustrate this than the food crisis that emerged in 2008 and perhaps even earlier. Food prices started to rise to such an extent that for the poorest among our world population, for whom the cost of food is a very significant part of their income, buying food and feeding their livestock became a serious problem. The crisis was ascribed to at least three factors ... 

A "fuel or food" debate is also in progress, because biofuels are made from agricultural products and therefore they drive up food prices. Today 33 nations are at risk of social unrest because of the rise in food prices (most of their families spend 75%-80% of their income on food). In the United States, a fifth of the corn crop is used to brew ethanol and as more com is planted shortages develop in other produce, such as soybeans. 

Biofuels have triggered a "food versus fuel debate." A few years ago turning farms into fuel factories appeared to be a good idea and both Europe and the United States supported it. For example, the American Congress mandated a fivefold increase in the use of biofuels. Today these views and policies are being reconsidered because they drive up food prices, which in turn contribute to starvation. 

Sugarcane- or cellulose-based ethanol has less of an effect on food prices, but its expanded production can end up destroying wildlife habitat and forests, threatening the survival of the rainforests, and polluting water supplies. The DOE is establishing three bioenergy research centers in order to evaluate the various processes of turning cellulose into fuel. 

One of the major benefits of pesticides is the protection of crop yields. According to the National Research Council (2000), removing pesticides from U.S. agriculture would cause crop production to decline as much as 50%, depending on the crop species. Moreover, farm exports would decrease by 50%, and consumer expenditures for food would increase— and be accompanied by an increase in inflation—as food prices increase. In the United States, we will spend 30-40% of our income on food as opposed to 8.7% currently. It was concluded that chemical insecticides should remain part of a larger toolbox of diverse pest management tactics in the foreseeable future. 

All that glitters is not green - biofuel in the Netherlands addresses the controversy of increasing food prices due to the increased use of biofuels. The press release formulated a strong recommendation. 

The use of bio-based raw materials contributes to an increase in food prices, due to competition with industrial applications. Thus, in 2006, a 20% production of biofuels in the United States led to a 53% increase in the price of com, a 30.5% increase in the price of flour and an 11% increase in the price of soya. This use for non-food purposes can lead to famine in poorer countries [COE 07], and poses ethical problems. 

To explore the full picture with respect to sustainability, social factors have to be taken into account as well. At present, the effect of the increased use of renewable raw materials on the availability and price of food is a subject of intense debate. It is not yet clear which factors are responsible for the recent volatility in food prices. While the World Bank estimates the influence of biofuels at 75%, the FAO also points to other factors that contribute to the rise in prices. These include changed nutritional habits in many emerging countries, poor harvests and increased fuel prices, which account for about 30% of production costs. 

Some Facts about Food Prices and Recent Food Price Increases... 

Until now, biofuels have had only small effects on world food prices but, although it is smaller than the increase in food and feed, biofuel demand is the largest source of new demand in recent decades and a strong factor underpinning the upward shift in agriculture commodity prices. The medium-term impact of biofuels on crop markets, at least until 2017, however, should not be overestimated, having had an influence on cereal and oilseed prices of 3% to, at most, 10% [13]. 

High prices for agricultural raw materials are good for some and bad for others. Unpredictable movements in food prices can still provide problems in the future. With high prices, the consequences in terms of hunger or malnutrition, especially in poor urban areas, will surface. But with low prices, consequences for poor farmers will be disastrous. Until recently, hundreds of millions of farmers could not lift themselves out of poverty because of low food... 

Banse, M., Nowicki, P. and van Meijl, H. (2008) Why are current world food prices so high A memo. Report 2008-040, http //edepot.wur.nl/28538/ (accessed 12 March 2012). 

Ammonium nitrate is inexpensive and a good source of water-soluble nitrogen. Farmers benefit because cheap fertilizers keep food production costs down. Consumers benefit because food prices are low. The dark side of ammonium nitrate is that it is an explosive. Handling it can lead to industrial accidents. It can be used as an explosive by terrorists as was done in 1995 when approximately a ton of ammonium nitrate was detonated next to the Federal Building in Oklahoma City. 

The current economic situation favors increasing use of low erucic acid rapeseed oil by consumers facing higher food prices and by food manufacturers. It is reasonable to forecast that the Canadian consumption of low erucic acid rapeseed oil will continue to rise. World prices favor the development of technology to process local products and pressures on the food budget encourage consumers to seek the best buys in the supermarket. 

Castor oil is also used as a lubricant in engines. This makes use of another of its exceptional properties its viscosity does not change much as the temperature is raised. Attempts to use castor oil in biodiesel were reported in Africa where the plant is cultivated for this purpose. As castor beans are not consumed directly by people, this practice does not cause food prices to rise. 

Food prices in the developing countries are still low and, in particular, are those of staple foods such as rice, cassava, maize, and wheat. Because most of the population has a low income, they cannot afford expensive food. On the other hand, poverty is induced by a large proportion of the agricultural population or population unemployed outside the agricultural sector. Most small farmers cannot produce efficiently enough therefore, to keep food prices low the Government is forced to... 

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