The rising cost of food

Marylebone farmers' market, London (picture Justinc)

The rise in food prices around the world is yet another issue that should bring countries together, yet risks driving them apart.

The reasons for the rapid rise in prices are fairly clear. There has been a big increase in demand driven by a rise in population – so there are more mouths to feed – but, not only is the population rising, it is also getting richer which means that people are looking for more exotic and resource-intensive forms of food. Meat, for example, uses up much more grain in production that it replaces in the diet. As the population of China eats more meat, prices of food generally will rise. The consequences of this were described on the blog here.

Then we can add to an increase in demand a fall in supply. Grain is being diverted into the manufacture of biofuels, in the hope of producing carbon-neutral fuel for transport. In fact, biofuels are not that good for the environment, but nevertheless they are still popular and there are substantial programmes dedicated to encouraging their production. This blog ocmmented on biofuels here.

A rise in demand and a fall in supply will lead to higher prices for everyone. Well, not quite everyone. Faced with the prospect that farmers will export more of their production to take advantage of high world prices, some governments have stepped in to impose export bans. Food that is exported is food that cannot be sold on the domestic market, and governments in countries such as China, Indonesia and Kazakhstan are afraid of the possibility of price rises and shortages at home.

Refusing to export grain means that another country is forbidden from importing it. But every country needs to import something. Even it has enough food to eat, it is sure to need oil, or manufactured goods, or tantalum.

So the extension of prohibitions on exports will end up hurting everybody, even if it seems like a short-term solution at the time.

Now, the rise in the price of food is a serious problem and has its roots in some of the fundamental shifts in the global economy, based on demographic and ecological changes. These are factors that will not go away soon. That means that any solution will arise from political action rather than simply from the passage of time, and that political action will need to be coordinated at international level. There is no national solution to the problems of food supply, however much some governments might hope for one.

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