The years 2007–2008 saw dramatic increases in world food prices, creating a global crisis and causing political and economical instability and social unrest in both poor and developed nations.
Systemic causes for the worldwide increases in food prices continue to be the subject of debate. Initial causes of the late 2006 price spikes included droughts in grain-producing nations and rising oil prices. Oil price increases also caused general escalations the costs of fertilizers, food transportation, and industrial agriculture. Root causes may be the increasing use of biofuels in developed countries (see also food vs fuel), and an increasing demand for a more varied diet across the expanding middle-class populations of Asia. These factors, coupled with falling world-food stockpiles all contributed to the world-wide rise in food prices. Causes not commonly attributed by mainstream views include structural changes in trade and agricultural production, agricultural price supports and subsidies in developed nations, diversions of food commodities to high input foods and fuel, commodity market speculation, and climate change.
Drastic price increases
Between 2006 and 2008 average world prices for rice rose by 217%, wheat by 136%, maize by 125% and soybeans by 107%. In late April 2008 rice prices hit 24 cents (U.S.) per U.S. pound, more than doubling the price in just seven months.
World population growth
Although some commentators have argued that this food crisis stems from unprecedented global population growth, others point out that world population growth rates have dropped dramatically since the 1980s, and grain availability has continued to outpace population. However, despite production gains made in the last decade, world food demand outpaces any production increases. According to Joachim von Braun, of the IFPRI, total food production increases only about 1 to 2 percent per year, while total world population increases approximately 4% . Aggregate cereal grain food production, per capita, had risen yearly from the 1960s to the 1980s but has been in decline since. However, this does not take into account any non-food uses of grain production.
World population has grown from 1.6 billion in 1900 to an estimated 6.8 billion .
Increased demand for more resource intensive food
The head of the International Food Policy Research Institute, stated in 2008 that the gradual change in diet among newly prosperous populations is the most important factor underpinning the rise in global food prices. Where food utilization has increased, it has largely been in processed ("value added") foods, sold in developing and developed nations. Total grain utilization growth since 2006 (up three percent, over the 2000–2006 per annum average of two percent) has been greatest in non-food usage, especially in feed and biofuels. One kilogram of beef requires seven kilograms of feed grain. These reports, therefore, conclude that usage in industrial, feed, and input intensive foods, not population growth among poor consumers of simple grains, has contributed to the price increases.
Although the vast majority of the population in Asia remains rural and poor, the growth of the middle class in the region has been dramatic. For comparison, in 1990, the middle class grew by 9.7 percent in India and 8.6 percent in China, but by 2007 the growth rate was nearly 30 percent and 70 percent respectively. The corresponding increase in Asian affluence also brought with it a change in lifestyle and eating habits, particularly a demand for greater variety, leading to increased competition with western nations for already strained agricultural resources. This demand exacerbates dramatic increases in commodity prices such as oil.
Another issue was rising affluence in India and China was reducing the 'shock absorber' of poor people who are forced to reduce their resource consumption when food prices rise. This reduced price elasticity and caused a sharp rise in food prices during some shortages. In the media, China is often mentioned as one of the main reasons for the increase in world food prices. However, China has to a large extent been able to meet its own demand for food, and even exports its surpluses in the world market.
Impact of petroleum price increases
The rise in the price of oil has heightened the costs of fertilizers (in some instances doubling the price within the six months before April, 2008), the majority of which require petroleum or natural gas to manufacture. Although the main fossil fuel input for fertilizer comes from natural gas to generate hydrogen for the Haber–Bosch process (see: Ammonia production), natural gas has its own supply problems similar to those for oil. Because natural gas can substitute for petroleum in some uses (for example, natural gas liquids and electricity generation), increasing prices for petroleum lead to increasing prices for natural gas, and thus for fertilizer.
Costs for fertilizer raw materials other than oil, such as potash, have themselves been increasing as increased production of staples increases demand. This is causing a boom (with associated volatility) in agriculture stocks.
Declining world food stockpiles
In the past, nations tended to keep more sizable food stockpiles, but more recently, due to the fast pace at which food could be grown and the ease with which it could be imported, less emphasis was placed on keeping high stockpiles. Therefore, for example, in February 2008 wheat stockpiles hit a 60-year low in the United States (see also Rice shortage).
Financial speculation
Destabilizing influences, including indiscriminate lending and real estate speculation, led to a crisis in January 2008, and eroded investment in food commodities. The United States, specifically, had been facing an economic crisis which eventually lead to recession.
Financial speculation in commodity futures following the collapse of the financial derivatives markets has contributed to the crisis due to a "commodities super-cycle." Financial speculators seeking quick returns have removed trillions of dollars from equities and mortgage bonds, some of which has been invested into food and raw materials. That American commodities speculation could have a worldwide impact on food prices is reflected in the globalization of food production. It represents the concentration of wealth throughout the world which Frances Moore Lappé equates to a weakening in fundamental democracy. In a recent article for The Nation , she suggests that there is no food shortage but that "as long as food is merely a commodity in societies that don't protect people's right to participate in the market, and as long as farming is left vulnerable to consolidated power off the farm, many will go hungry, farmers among them—no matter how big the harvests."
Impact of trade liberalization
Some theorists, such as Martin Khor of the Third World Network, point out that many developing nations have gone from being food independent to being net food importing economies since the 1970s and 1980s International Monetary Fund (and later the World Trade Organisation's Agreement on Agriculture) free market economics directives to debtor nations. In opening developing countries to developed world food imports which continue to be subsidised by Western governments, developing nations have become dependent upon food imports which are cheaper than those which can be produced by local smallholders agriculture, even in the poorest regions of the world.
While developed countries pressured the developing world to abolish subsidies in the interest of trade liberalization, rich countries largely kept subsidies in place for their own farmers. In recent years United States government subsidies have been added which pushed production toward biofuel rather than food and vegetables .
Impact of food for fuel
Main article: Food vs fuelOne systemic cause for the price rise is held to be the diversion of food crops (maize in particular) for making first-generation biofuels. An estimated 100 million tons of grain per year are being redirected from food to fuel. (Total worldwide grain production for 2007 was just over 2000 million tonnes.) As farmers devoted larger parts of their crops to fuel production than in previous years, land and resources available for food production were reduced correspondingly. This has resulted in less food available for human consumption, especially in developing and least developed countries, where a family's daily allowances for food purchases are extremely limited. The crisis can be seen, in a sense, to dichotomize rich and poor nations, since, for example, filling a tank of an average car with biofuel, amounts to as much maize (Africa's principal food staple) as an African person consumes in an entire year.
Brazil, the world's second largest producer of ethanol after the U.S., is considered to have the world's first sust
Food Product Machinery Manufacturing Industry in the U.S. and its ...
Food Product Machinery Manufacturing Industry in the U.S. and ... Workers to Total Employees Ratio ... This report is an in-depth financial evaluation of the Global Drinks Manufacturing ...
FINANCIAL REVIEW
... FINANCIAL REVIEW In fiscal 2009, ended March 31, 2009, conditions were harsh for Morinaga's core brands in the Food Manufacturing segment, leading ... The cost of sales ratio ...
BizStats - business statistics, industry statistics, financial ratios
business statistics, industry statistics, financial ratios ... Do you need: More detailed Industries? More timely data? Local industry trends?
food conversion ratio definition of food conversion ratio in the Free ...
Financial dictionary ... food conversion ratio food engineering food infection food irradiation food manufacturing
Manufacturing.net
Financial News Global Manufacturing Government News ... Food/Beverage Medical Metals Pharmaceuticals/Biotech ... capacity of a disk-based backup system by a ratio ...
Download Industry Metrics Report - NAICS Code 311 - Food Manufacturing
NAICS code 311 - Food Manufacturing Basic Industry Description for ... Presents 14 commonly-used and insightful financial ratios ... efficiency ratios and an interest coverage ratio ...
BizStats - business statistics, industry statistics, financial ratios
Fruit and vegetable preserving and specialty food manufacturing Corp Average Financial Ratios ... Quick Ratio: Current Ratio: Inventory Turnover (x) Assets:Sales (%) Tot ...
3556 - Food Products Machinery | Industry Report | Industry Reports ...
Establishments primarily engaged in manufacturing food packaging machinery are ... on Assets Ratio, Return on Net Worth Ratio, Inventory to Sales Ratio, and more Financial ...
Download Industry Metrics Report - NAICS Code 3119 - Other Food ...
NAICS code 3119 - Other Food Manufacturing Basic Industry ... Presents 14 commonly-used and insightful financial ratios ... efficiency ratios and an interest coverage ratio ...
All Other Miscellaneous Food Manufacturing Industry in the U.S. and ...
All Other Miscellaneous Food Manufacturing Industry ... Workers to Total Employees Ratio; Hourly ... debt?This report is an in-depth financial evaluation of the Global Drinks Manufacturing ...