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The end of cheap food

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  • Pete Cohon
    The end of cheap food Dec 6th 2007 From The Economist print edition Rising food prices are a threat to many; they also present the world with an enormous
    Message 1 of 1 , Dec 8, 2007
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      The end of cheap food

      Dec 6th 2007

      From The Economist print edition

      Rising food prices are a threat to many; they also present the world with an
      enormous opportunity

      FOR as long as most people can remember, food has been getting cheaper and
      farming has been in decline. In 1974-2005 food prices on world markets fell
      by three-quarters in real terms. Food today is so cheap that the West is
      battling gluttony even as it scrapes piles of half-eaten leftovers into the

      That is why this year's price rise has been so extraordinary. Since the
      spring, wheat prices have doubled and almost every crop under the sun-maize,
      milk, oilseeds, you name it-is at or near a peak in nominal terms. The
      Economist's food-price index is higher today than at any time since it was
      created in 1845 (see chart). Even in real terms, prices have jumped by 75%
      since 2005. No doubt farmers will meet higher prices with investment and
      more production, but dearer food is likely to persist for years (see
      article). That is because "agflation" is underpinned by long-running changes
      in diet that accompany the growing wealth of emerging economies-the Chinese
      consumer who ate 20kg (44lb) of meat in 1985 will scoff over 50kg of the
      stuff this year. That in turn pushes up demand for grain: it takes 8kg of
      grain to produce one of beef.

      But the rise in prices is also the self-inflicted result of America's
      reckless ethanol subsidies. This year biofuels will take a third of
      America's (record) maize harvest. That affects food markets directly: fill
      up an SUV's fuel tank with ethanol and you have used enough maize to feed a
      person for a year. And it affects them indirectly, as farmers switch to
      maize from other crops. The 30m tonnes of extra maize going to ethanol this
      year amounts to half the fall in the world's overall grain stocks.

      Dearer food has the capacity to do enormous good and enormous harm. It will
      hurt urban consumers, especially in poor countries, by increasing the price
      of what is already the most expensive item in their household budgets. It
      will benefit farmers and agricultural communities by increasing the rewards
      of their labour; in many poor rural places it will boost the most important
      source of jobs and economic growth.

      Although the cost of food is determined by fundamental patterns of demand
      and supply, the balance between good and ill also depends in part on
      governments. If politicians do nothing, or the wrong things, the world faces
      more misery, especially among the urban poor. If they get policy right, they
      can help increase the wealth of the poorest nations, aid the rural poor,
      rescue farming from subsidies and neglect-and minimise the harm to the
      slum-dwellers and landless labourers. So far, the auguries look gloomy.

      - - -

      Full story:


      OR: http://tinyurl.com/29docp

      [Thanks to Pamela Rice and Ivu-veg-news]

      [Non-text portions of this message have been removed]
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