posted on 2009-11-28 by JPerez
While the cost of food has been rising steadily since 2000, few took notice until recently, when the problem finally reached crisis proportions. Skyrocketing world food prices--up almost 50% since last year--have triggered riots across the developing world and forced the world's largest food aid agency to announce a $500 million deficit for 2008.

Low-income countries that are net food importers have been hit hardest. Already, 37 countries--21 of which are in Africa--are in a food security crisis according to the United Nations Food and Agriculture Organization (FAO). The World Bank recently announced that the current food situation could push 100 million people into deeper poverty, undoing years of progress in the fight against global poverty and hunger. Poor households spend between 60 to 80% of their income on food, compared to only 10-20% in most industrialized countries.

Assessing the Problem: Supply vs Demand

Despite several record-breaking harvests, world cereals production between 2000 and 2007 fell well short of consumption. The shortfall has forced the depletion of world grain stocks--a useful proxy for global food security--which are now at their lowest level in 25 years.

Population growth has contributed only marginally to the increasing demand for cereals, including wheat, rice and corn. Rather, growing consumption of meat and dairy products in the developing world--a consequence of higher incomes and urbanization--means that more grain is being fed to livestock. Crop use for biofuel production is growing even faster. Almost all of the increase in global maize production between 2004 and 2007 went to make corn-based ethanol in the United States. The amount of corn required to fill one gas tank with ethanol fuel could feed one person for an entire year.

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