Why is the cost of food rising so rapidly?

More Consumption, Less Production

At heart, trade issues always come down to the principle of supply and demand, a game of tug-of-war between the producers and consumers. While issues on the supply side have certainly played a major role in rising food prices, experts also lay a portion of the blame on countless hungry mouths in the world.

There are approximately 6.7 billion people in the world, and the population increases by 78 million each year [source: Chamie]. To complicate matters further, analysts expect much of this growth to occur in Africa and Asia, where food prices are often highest.

Food price analysts also mention China and India's recent economic growth as additional factors that are driving up the cost of food. Large populations in these areas suddenly found themselves with enough disposable income to purchase meats and other pricey foods they were previously unable to buy on a regular basis, leading to more consumption. This follows an economic principle called Engel's law, which states that the healthier a country's economy, the more food its population consumes. A rise in the demand for meat means an increase in meat prices and an increase in meat production. This also ups the demand for produce, which is used to feed farm animals.

Some critics say rising food prices shouldn't be blamed on growth in countries such as India, but rather to the excess in countries like the United States. While the average Indian consumes 2,440 calories a day, the average American gobbles up 3,770 calories [source: Timmons]. Critics argue that if the average American cut down on how much food he or she consumes every day, global prices would drop.

Rising food costs are due to more than just changes in how much we eat or what we do with the crops. In some cases, high prices are due to forces beyond human control. The recent drought in Australia (the worst in the country's recorded history) drastically reduced its rice production -- crops which normally feed 20 million people worldwide [source: Associated Press]. Droughts in Eastern Europe have similarly hurt grain and corn production. Other major harvests were disrupted by floods in West Africa and North Korea, deep frosts in China, and droughts throughout Africa. Many experts worry that these are not freak weather occurrences, but are symptoms of climate change.

Halting the global rise in food prices is no easy task with so many intertwined causes. Efforts are underway to increase the production of high-yield crops in developing nations, as well as increase wages to cope with the increased cost of living. Governments and global organizations are busy adjusting ethanol subsidies, tariffs, and trade restrictions to reduce food shortages. On the consumer end, the responsibility largely falls to the individual. Could you change your diet to help alleviate hunger, starvation and social unrest on the other side of the globe?

To learn more about biofuels, climate, global trade and other factors affecting rising food costs, explore the links below.

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  • Associated Press. "Causes of the world food crisis." May 27, 2008. (May 29, 2008)http://ap.google.com/article/ALeqM5jXWlfvmQyeL4YqqbC4Gbmm2PZ0CgD90U4MUG1
  • Chamie, Joseph. "Population Forecast for the Next 15,000 Days." The Globalist. July 9, 2007. (May 29, 2008)http://www.theglobalist.com/StoryId.aspx?StoryId=5961
  • Cowen, Tyler. "Freer Trade Could Fill the World's Rice Bowl." The New York Times. April 27, 2008.http://www.nytimes.com/2008/04/27/business/worldbusiness/27view.html?_r=1&oref=slogin
  • Dimsdale, John. "Ethanol growth pushes up food prices." Marketplace. June 15, 2007.http://marketplace.publicradio.org/display/web/2007/06/15/ethanol_growth_pushes_up_food_prices/
  • Eaton, Sam. "India halts trading to slow food prices." Marketplace. May 8, 2008.http://marketplace.publicradio.org/display/web/2008/05/08/india_commodities
  • The Economist. "Cheap no more." Dec. 6, 2007.http://www.economist.com/displaystory.cfm?story_id=10250420
  • Energy Information Administration. "Ethanol made from corn and other crops." Energy Kid's Page. October 2007. (May 29, 2008)http://www.eia.doe.gov/kids/energyfacts/sources/renewable/ethanol.html
  • LaMonica, Martin. "Biofuels and food prices: Running the numbers." CNET News. May 23, 2008. (May 29, 2008)http://news.cnet.com/8301-11128_3-9951108-54.html
  • Martin, Andrew. "Fuel Choices, Food Crises and Finger-Pointing." The New York Times. April 15, 2008.http://www.nytimes.com/2008/04/15/business/worldbusiness/15food.html
  • Meade, Bridget and Stacey Rosen. "Food & Marketing." USDA Economic Research Service. July 1997. (May 29, 2008)http://www.ers.usda.gov/publications/agoutlook/jul1997/ao242e.pdf
  • The New York Times. "The World Food Crisis." April 10, 2008.http://www.nytimes.com/2008/04/10/opinion/10thu1.html
  • Sellen, Tom. "Fungus Strain is Menacing Wheat Crop." The Wall Street Journal. May 27, 2008.http://ap.google.com/article/ALeqM5jXWlfvmQyeL4YqqbC4Gbmm2PZ0CgD90U4MUG1
  • Timmons, Heather. "Indians Find U.S. at Fault in Food Cost." The New York Times. May 14, 2008.http://www.nytimes.com/2008/05/14/business/worldbusiness/14food.html
  • Vandore, Emma. "Report: World food prices set to fall." The Associated Press. May 29, 2008. (May 29, 2008)http://ap.google.com/article/ALeqM5jiEc6AcqnEaNlptkata5Ah2nTueAD90VAURG0
  • Walt, Vivienne. "The World's Growing Food-Price Crisis." TIME Magazine. Feb. 27, 2008.http://www.time.com/time/world/article/0,8599,1717572,00.html

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