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Europeans Debate Food Prices
The years 2007–2008 saw dramatic world food price rises, bringing a state of global crisis and causing political and economical instability and social unrest in poor and developed nations.
Systemic causes for the world-wide food price increase continue to be the subject of debate. Initial causes of the late 2006 price spikes included unseasonable droughts in grain producing nations and rising oil prices. Oil prices further heightened the costs of fertilizers, food transport, and industrial agriculture. Other causes may be the increasing use of biofuels in developed countries (see also Food vs fuel),[1] and an increasing demand for a more varied diet (especially meat) across the expanding middle-class populations of Asia.[2][3] These factors, coupled with falling world food stockpiles have all contributed to the dramatic world-wide rise in food prices.[4] Longterm causes remain a topic of debate. These may 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
Since the start of 2006, the average world price for rice has risen by 217 percent, wheat by 136 percent, maize by 125 percent and soybeans by 107 percent.[5] In late April 2008, rice prices hit 24 cents a pound, twice the price that it was seven months earlier.[6] ..
Factors
Several factors contributed to the rising food price. Analysts attributed the price rises to a perfect storm of poor harvests in various parts of the world, increasing biofuel usage, lower food reserves, the US Federal Reserve decreasing interest rates so that money is no longer a means to preserve wealth over the long term (people invest in food commodities which causes an increase in demand and therefore price), growing consumer demand in Asia, oil price rises, and changes to the world economy.[7]
Impact of food for fuel
One systemic cause for the price rise is held to be the diversion of food crops (maize in particular) for making first-generation biofuels.[8] An estimated 100 million tonnes of grain per year are being redirected from food to fuel.[9] (Total worldwide grain production for 2007 was just over 2000 million tonnes.[10]) 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.[4]
Since late 2007, "Agflation," caused by the increased diversion of maize harvests in biofuels, the tying of maize to rising oil prices by commodity traders, and a resulting price rise, has caused market substitution, with price rises cascading through other commodities: first wheat and soy prices, then later rice, soy oil, and a variety of cooking oils.
Brazil, the world's second largest producer of ethanol after the U.S., is considered to have the world's first sustainable biofuels economy[11][12] and its government claims Brazil's sugar cane based ethanol industry has not contributed to the 2008 food crises.[13] (See Ethanol fuel in Brazil)
Second- and third-generation biofuels (such as cellulosic ethanol and algae fuel, respectively) may someday ease the competition with food crops, as non food energy crops can grow on marginal lands unsuited for food crops, but these advanced biofuels require further development of farming practices and refining technology; in contrast, ethanol from maize uses mature technology and the maize crop can be shifted between food and fuel use quickly.
Europeans Debate Food Prices
The years 2007–2008 saw dramatic world food price rises, bringing a state of global crisis and causing political and economical instability and social unrest in poor and developed nations.
Systemic causes for the world-wide food price increase continue to be the subject of debate. Initial causes of the late 2006 price spikes included unseasonable droughts in grain producing nations and rising oil prices. Oil prices further heightened the costs of fertilizers, food transport, and industrial agriculture. Other causes may be the increasing use of biofuels in developed countries (see also Food vs fuel),[1] and an increasing demand for a more varied diet (especially meat) across the expanding middle-class populations of Asia.[2][3] These factors, coupled with falling world food stockpiles have all contributed to the dramatic world-wide rise in food prices.[4] Longterm causes remain a topic of debate. These may 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
Since the start of 2006, the average world price for rice has risen by 217 percent, wheat by 136 percent, maize by 125 percent and soybeans by 107 percent.[5] In late April 2008, rice prices hit 24 cents a pound, twice the price that it was seven months earlier.[6] ..
Factors
Several factors contributed to the rising food price. Analysts attributed the price rises to a perfect storm of poor harvests in various parts of the world, increasing biofuel usage, lower food reserves, the US Federal Reserve decreasing interest rates so that money is no longer a means to preserve wealth over the long term (people invest in food commodities which causes an increase in demand and therefore price), growing consumer demand in Asia, oil price rises, and changes to the world economy.[7]
Impact of food for fuel
One systemic cause for the price rise is held to be the diversion of food crops (maize in particular) for making first-generation biofuels.[8] An estimated 100 million tonnes of grain per year are being redirected from food to fuel.[9] (Total worldwide grain production for 2007 was just over 2000 million tonnes.[10]) 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.[4]
Since late 2007, "Agflation," caused by the increased diversion of maize harvests in biofuels, the tying of maize to rising oil prices by commodity traders, and a resulting price rise, has caused market substitution, with price rises cascading through other commodities: first wheat and soy prices, then later rice, soy oil, and a variety of cooking oils.
Brazil, the world's second largest producer of ethanol after the U.S., is considered to have the world's first sustainable biofuels economy[11][12] and its government claims Brazil's sugar cane based ethanol industry has not contributed to the 2008 food crises.[13] (See Ethanol fuel in Brazil)
Second- and third-generation biofuels (such as cellulosic ethanol and algae fuel, respectively) may someday ease the competition with food crops, as non food energy crops can grow on marginal lands unsuited for food crops, but these advanced biofuels require further development of farming practices and refining technology; in contrast, ethanol from maize uses mature technology and the maize crop can be shifted between food and fuel use quickly.