The facts about the current food price increase are established: between 2005 and 2007, maize prices have increased by 80 per cent and continue to rise, wheat prices have risen by 70 per cent, milk powder by 90 per cent, rice by 25 per cent. Many other commodity prices have also risen sharply over this period.
The simultaneous and prolonged rise in food prices is what makes the current crisis such a cause for concern. These global price increases have had different impacts and consequences around the world. Food scarcity is widespread across South Asia, Africa and Latin America, and a number of countries have imposed export bans and/or some form of price control for basic commodities.
In countries such as Haiti and Senegal, which import up to 4/5 of their annual rice requirements, consumer reactions have reach desperation and led to riots. The poorer a person is, the greater the percentage of their income they spend on food. Even here in the UK my weekly shopping bill has increased by 11 per cent in the past year.
There is fairly broad consensus that the price crisis is caused by a combination of multiple stresses; although they may be occurring across different geographic areas, in concert these stresses are affecting the global food system. Hence it is being referred to as a “perfect storm”.
For example, the recent drastic world-wide increases in the price of rice are due to drought combined with the gradual farmer movement out of rice production in Australia, reduction in global stocks, competition for land from biofuels, unequal subsidies between richer and poorer nations and the decline of many domestic production systems in poorer nations.
To complicate matters, some of the shocks arise from responses to other food system demands, as in the case of European farmers’ decisions to move out of livestock and vegetables in order grow more grains to take advantage of high global demand. To add to this mix, the high prices of oil and fuels are increasing the cost of inputs and transport.
The coalescing impacts of these shocks leading to the food price increase are fundamentally due to the organisations and rules governing food systems. The price increases illustrate the lack of co-ordination among national governments with unequal capacity and political power, as well as the consequences of little regulation of private sector activities.
There is over-subsidised production in Europe and the US, which contrasts with the opposite situation in many poorer countries (even if governments still exert some control over commodity supply and price). There are many competing objectives and pressures on food systems, from profit motives to economic development goals, combined with very powerful and persuasive narratives justifying each of these pressures.
For example, in many places, staple food production competes with other agricultural commodities, ranging from wine to flowers to sugarcane for ethanol, or grains for livestock feed, as farmers have tried a range of products looking to earn a good price and a steady income. There is also inequity in production capacity, support and infrastructure, but trade and world markets alone cannot resolve these. We need to examine the problems in food system organisation, structure and governance to avoid these crises in long term.
Although inequities and price volatility have plagued food systems for several decades, increasing climate change and continued decline in ecosystem services (the benefits such as clean air, plant production, and clean water that humans receive from the natural environment), combined with continued economic growth (or desires for this) will bring more of these “perfect storms” and high prices for multiple commodities.
There is an inherent paradox at the heart of food systems: agricultural production (for food and non-food products) is a major driver of diminishing ecosystem services, yet in many cases these same food production systems ultimately run up against ecological limits (for example, climate shocks, soil nutrients, water quantity and quality).
Both the consequences of environmental change and response to limit these, such as planting biofuels, mitigating water pollution, or lowering the embedded carbon in imported foods run the serious risk of further pressuring both producers and consumers, as food systems are put under new pressures. For example, we now face serious questions about the possibility to expand agricultural land use in almost all countries, particularly when water scarcity and the threat of increased droughts and floods are taken into consideration.