food prices

According to the FAO data, the current spike in food prices is quite modest. When adjusted for inflation and compared to other data over the last 50 years, the price hike is barely noticeable. In the 1970's for example, rice, wheat, and other cereals were anywhere from double to almost four times as much as they are today. Yet, corn has risen 31% over the past year, while wheat has gone up a whopping 130%, according to Bloomberg.

Several factors have been blamed for these price hikes. Oil prices play an important part as most food stuffs are transported over large distances. I read somewhere that the average food item travels over 1,500 miles before it reaches your table. Oil also powers farm equipment and irrigation devices, that are both needed and used extensively to grow food on an industrial scale. Petroleum is key for fertilizers and pesticides that are an equally integral part of the production process.

It seems likely that oil prices will continue to move upward over the long term. On top of that we will no doubt see several spikes -as the one we are currently in- and drops -that will surely follow-. But the underlying trend will be up and up. Hopefully, that trend will remain "visible"enough so people have some incentive to change their life-styles before the whole rigamarole comes tumbling down in one big collapse.

Apart from oil, there are other factors. One is the biofuel craze, or growing crops for fuel production. More fuel production means less farm land is available for food. This trend is unlikely to persist for long but in the meantime it is giving rise to a fair bit of speculation. Wild promises also make it less likely people will think conservation.

Another factor is the shift in eating habits. That shift is especially pronounced in developing nations such as India and China, that are now changing to Western eating habits. Never mind that such habits come with definite health concerns. The key shift is towards more meat. In China meat consumption per capita has gone from 20 kg in the 1980's to over 50 kg today. Given how inefficient meat production is, and how wasteful it is with resources, that is not good. This trend however is likely to continue for as long as beef is available and people have money to pay for it.

Considering all these factors it may surprise you that FAO predicts food prices will stabilize in the next decade. Not just stabilize mind you, but remain low compared to historical trends. If that is so, there will be no stopping the predicted population boom. Estimates are there will be 9.2 billion people on the planet by 2050.  But then again, people thought US real estate prices would rise forever too.

I am willing to bet we are in for a big surprise. By mid-century the world will be a different place. And it won't be the rosy predictions people have grown accustomed to from watching Star Trek and similar shows.