2007–2008 world food price crisis
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food prices Food prices refer to the average price level for food across countries, regions and on a global scale. Food prices have an impact on producers and consumers of food. Price levels depend on the food production process, including food marketing an ...
increased dramatically in 2007 and the first and second quarter of 2008, creating a
global crisis A global catastrophic risk or a doomsday scenario is a hypothetical future event that could damage human well-being on a global scale, even endangering or destroying modern civilization. An event that could cause human extinction or permanen ...
and causing political and economic instability and social unrest in both poor and
developed nations A developed country (or industrialized country, high-income country, more economically developed country (MEDC), advanced country) is a sovereign state that has a high quality of life, developed economy and advanced technological infrastruct ...
. Although the media spotlight focused on the riots that ensued in the face of high prices, the ongoing crisis of
food insecurity Food security speaks to the availability of food in a country (or geography) and the ability of individuals within that country (geography) to access, afford, and source adequate foodstuffs. According to the United Nations' Committee on World F ...
had been years in the making.How do Food Prices Affect Producers and Consumers in Developing Countries?
, ICTSD, Information Note Number 10, September 2009
UN Food and Agriculture Organization (2009). The State of Food Insecurity in the World 2009. Rome. Systemic causes for the worldwide increases in food prices continue to be the subject of debate. After peaking in the second quarter of 2008, prices fell dramatically during the
late-2000s recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At t ...
but increased during late 2009 and 2010, reaching new heights in 2011 and 2012 (see 2010–2012 world food price crisis) at a level slightly higher than the level reached in 2008. Over the next years, prices fell, reaching a low in March 2016 with the deflated
Food and Agriculture Organization The Food and Agriculture Organization of the United Nations (FAO)french: link=no, Organisation des Nations unies pour l'alimentation et l'agriculture; it, Organizzazione delle Nazioni Unite per l'Alimentazione e l'Agricoltura is an intern ...
(FAO) food price index close to pre-crisis level of 2006. The initial causes of the late-2006 price spikes included droughts in grain-producing nations and rising oil prices. Oil price increases also caused general escalations in the costs of
fertilizer A fertilizer (American English) or fertiliser (British English; see spelling differences) is any material of natural or synthetic origin that is applied to soil or to plant tissues to supply plant nutrients. Fertilizers may be distinct from ...
s, food transportation, and
industrial agriculture Industrial agriculture is a form of modern farming that refers to the industrialized production of crops and animals and animal products like eggs or milk. The methods of industrial agriculture include innovation in agricultural machinery and far ...
. Root causes may be the increasing use of
biofuel Biofuel is a fuel that is produced over a short time span from biomass, rather than by the very slow natural processes involved in the formation of fossil fuels, such as oil. According to the United States Energy Information Administration (E ...
s in developed countries (see also
food vs fuel Food versus fuel is the dilemma regarding the risk of diverting farmland or crops for biofuels production to the detriment of the food supply. The biofuel and food price debate involves wide-ranging views, and is a long-standing, controversial o ...
), and an increasing demand for a more varied diet across the expanding middle-class populations of Asia. The FAO also raised concerns about the role of
hedge fund A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as sho ...
s speculating on prices leading to major shifts in prices. These factors, coupled with falling world-food stockpiles, all contributed to the worldwide rise in food prices.


Drastic price increases and possible causes

Between 2006 and 2008 average world prices for rice rose by 217%, wheat by 136%,
corn Maize ( ; ''Zea mays'' subsp. ''mays'', from es, maíz after tnq, mahiz), also known as corn (North American and Australian English), is a cereal grain first domesticated by indigenous peoples in southern Mexico about 10,000 years ago. Th ...
by 125% and soybeans by 107%. In late April 2008 rice prices hit 24 cents (US) per US pound, more than doubling the price in just seven months.


World population growth

Although some commentators have argued that this food crisis stems from unprecedented
global Global means of or referring to a globe and may also refer to: Entertainment * ''Global'' (Paul van Dyk album), 2003 * ''Global'' (Bunji Garlin album), 2007 * ''Global'' (Humanoid album), 1989 * ''Global'' (Todd Rundgren album), 2015 * Bruno ...
population growth Population growth is the increase in the number of people in a population or dispersed group. Actual global human population growth amounts to around 83 million annually, or 1.1% per year. The global population has grown from 1 billion in 1800 to ...
, others point out that world population growth rates have dropped dramatically since the 1980s, and grain availability has continued to outpace population. To prevent price growth, food production should outpace population growth, which was about 1.2% per year. But there was a temporary drop in food production growth: for example, wheat production during 2006 and 2007 was 4% lower than that in 2004 and 2005. World population has grown from 1.6 billion in 1900 to over 7.5 billion today.


Increased demand for more resource intensive food

The head of the
International Food Policy Research Institute The International Food Policy Research Institute (IFPRI) is an international agricultural research center founded in the early 1970s to improve the understanding of national agricultural and food policies to promote the adoption of innovations ...
, stated in 2008 that the gradual change in diet among newly prosperous populations is the most important factor underpinning the rise in global food prices. Where food consumption has increased, it has largely been in processed ("
value added In business, total value added is calculated by tabulating the unit value added (measured by summing unit profit sale price and production cost">Price.html" ;"title="he difference between Price">sale price and production cost], unit depreciatio ...
") foods, sold in developing and developed nations. Total grain utilization growth since 2006 (up three percent, over the 2000–2006 per annum average of two percent) has been greatest in non-food usage, especially in feed and biofuels. One kilogram of beef requires seven kilograms of feed grain. These reports, therefore, conclude that usage in industrial, feed, and input intensive foods, not population growth among poor consumers of simple grains, has contributed to the price increases. Rising meat consumption due to changes in lifestyle can in turn lead to higher energy consumption due to the higher energy-intensity of meat products, for example, one kilogram of meat uses about 19 times as much energy to produce it as the same amount of apple. Although the vast majority of the population in Asia remains rural and poor, the growth of the middle class in the region has been dramatic. For comparison, in 1990, the middle class grew by 9.7 percent in India and 8.6 percent in China, but by 2007 the Population growth rate, growth rate was nearly 30 percent and 70 percent respectively. The corresponding increase in Asian affluence also brought with it a change in lifestyle and eating habits, particularly a demand for greater variety, leading to increased competition with western nations for already strained agricultural resources. This demand exacerbates dramatic increases in
commodity In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. The price of a comm ...
prices such as oil. Another issue with rising affluence in India and China was reducing the "shock absorber" of poor people who are forced to reduce their resource consumption when food prices rise. This reduced price elasticity and caused a sharp rise in food prices during some shortages. In the media, China is often mentioned as one of the main reasons for the increase in world food prices. However, China has to a large extent been able to meet its own demand for food, and even exports its surpluses in the world market.


Effects of petroleum and fertilizer price increases

Starting in 2007, the prices of fertilizers of all kinds increased dramatically, peaking around the summer of 2008 (see graphs by the
International Fertilizer Industry Association The International Fertilizer Association (IFA) promotes the efficient and responsible production,distribution and use of plant nutrients to enable sustainable agricultural systems. IFA a membership consists of more than 400 entities from producers ...
). Prices approximately tripled for
ammonia Ammonia is an inorganic compound of nitrogen and hydrogen with the formula . A stable binary hydride, and the simplest pnictogen hydride, ammonia is a colourless gas with a distinct pungent smell. Biologically, it is a common nitrogenous was ...
,
urea Urea, also known as carbamide, is an organic compound with chemical formula . This amide has two amino groups (–) joined by a carbonyl functional group (–C(=O)–). It is thus the simplest amide of carbamic acid. Urea serves an important r ...
,
diammonium phosphate Diammonium phosphate (DAP; IUPAC name diammonium hydrogen phosphate; chemical formula (NH4)2(HPO4) is one of a series of water-soluble ammonium phosphate salts that can be produced when ammonia reacts with phosphoric acid. Solid diammonium phosp ...
,
muriate of potash Potassium chloride (KCl, or potassium salt) is a metal halide salt composed of potassium and chlorine. It is odorless and has a white or colorless vitreous crystal appearance. The solid dissolves readily in water, and its solutions have a sal ...
(KCl), and
sulfuric acid Sulfuric acid (American spelling and the preferred IUPAC name) or sulphuric acid ( Commonwealth spelling), known in antiquity as oil of vitriol, is a mineral acid composed of the elements sulfur, oxygen and hydrogen, with the molecular formu ...
(used for making phosphate fertilizer), and then fell just as dramatically in the latter part of 2008. Some prices doubled within the six months before April 2008. Part of the cause for these price rises was the rise in the price of oil, since most fertilizers require petroleum or
natural gas Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...
to manufacture. Although the main fossil fuel input for fertilizer comes from natural gas to generate hydrogen for the
Haber–Bosch process The Haber process, also called the Haber–Bosch process, is an artificial nitrogen fixation process and is the main industrial procedure for the production of ammonia today. It is named after its inventors, the German chemists Fritz Haber and C ...
(see:
Ammonia production Ammonia is one of the most highly produced inorganic chemicals. There are numerous large-scale ammonia plants worldwide, producing a grand total of 144 million tonnes of nitrogen (equivalent to 175 million tonnes of ammonia) in 2016. This has incr ...
), natural gas has its own supply problems similar to those for oil. Because natural gas can substitute for petroleum in some uses (for example,
natural gas liquids Natural-gas condensate, also called natural gas liquids, is a low-density mixture of hydrocarbon liquids that are present as gaseous components in the raw natural gas produced from many natural gas fields. Some gas species within the raw natur ...
and
electricity generation Electricity generation is the process of generating electric power from sources of primary energy. For electric utility, utilities in the electric power industry, it is the stage prior to its Electricity delivery, delivery (Electric power transmi ...
), increasing prices for petroleum lead to increasing prices for natural gas, and thus for fertilizer. Costs for fertilizer raw materials other than oil, such as
potash Potash () includes various mined and manufactured salts that contain potassium in water-soluble form.
, have been increasing as increased production of staples increases demand. This is causing a boom (with associated volatility) in agriculture stocks. The major IFPRI Report launched in February 2011 stated that the causes of the 2008 global food crisis were similar to that of the 1972–1974 food crisis, in that the
1970s energy crisis The 1970s energy crisis occurred when the Western world, particularly the United States, Canada, Western Europe, Australia, and New Zealand, faced substantial petroleum shortages as well as elevated prices. The two worst crises of this period wer ...
was the major driver, as well as the shock to cereal demand (from biofuels this time), low interest rates, devaluation of the dollar, declining stocks, and some adverse weather conditions. Unfortunately the IFPRI states that such shocks are likely to recur with several shocks in the future; compounded by a long history of neglecting agricultural investments.


Declining world food stockpiles

In the past, nations tended to keep more sizable food stockpiles, but more recently, due to a faster pace of food growth and ease of importation, less emphasis is placed on high stockpiles. For example, in February 2008 wheat stockpiles hit a 60-year low in the United States (see also 2008 global rice crisis). Stocks are often calculated as a residual between production and consumption, but it becomes difficult to discriminate between a de-stocking policy choices of individual countries and a deficit between production and consumption.


Financial speculation

Destabilizing influences, including indiscriminate lending and real estate speculation, led to a crisis in January 2008 and eroded investment in food commodities. Foreign investment drives productivity improvements, and other gains for farmers.


Commodity index funds

Goldman Sachs' entry into the commodities market via the
Goldman Sachs Commodity Index The S&P GSCI (formerly the Goldman Sachs Commodity Index) serves as a benchmark for investment in the commodity markets and as a measure of commodity performance over time. It is a tradable index that is readily available to market participants of ...
has been implicated by some in the 2007–2008 world food price crisis. In a 2010 article in Harper's magazine, Frederick Kaufman accused Goldman Sachs of profiting while many people went hungry or even starved. He argued that Goldman's large purchases of long-options on wheat futures created a
demand shock In economics, a demand shock is a sudden event that increases or decreases demand for goods or services temporarily. A positive demand shock increases aggregate demand (AD) and a negative demand shock decreases aggregate demand. Prices of goods ...
in the wheat market, which disturbed the normal relationship between
supply and demand In microeconomics, supply and demand is an economic model of price determination in a Market (economics), market. It postulates that, Ceteris paribus, holding all else equal, in a perfect competition, competitive market, the unit price for a ...
and price levels. He argues that the result was a '
contango Contango is a situation where the futures price (or forward price) of a commodity is higher than the ''expected'' spot price of the contract at maturity. In a contango situation, arbitrageurs or speculators are "willing to pay more owfor a comm ...
' wheat market on the Chicago Mercantile Exchange, which caused prices of wheat to rise much higher than normal, defeating the purpose of the exchanges (price stabilization) in the first place. however, a report by the
Organisation for Economic Co-operation and Development The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organization, intergovernmental organisation with 38 member countries ...
– using data from the
Commodity Futures Trading Commission The Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures, swaps, and certain kinds of options. The Commodity Exchange Ac ...
– showed tracking funds (of which Goldman Sachs Commodity Index was one) did not cause the bubble. For example, the report points out that even commodities without futures markets also saw price rises during the period. Some commodities ''without'' futures markets saw their prices rise as a consequence of the rising prices of commodities ''with'' futures markets: the World Development Movement (WDM, now
Global Justice Now Global Justice Now, formerly known as the World Development Movement (WDM), is a membership organisation based in the United Kingdom which campaigns on issues of global justice and development in the Global South. The organisation produces re ...
) stated there was strong evidence that the rising price of wheat caused the price of rice to subsequently rise as well.


Effects of trade liberalization

Some theorists, such as
Martin Khor Martin Khor Kok Peng (November 9, 1951 – 1 April 2020) was the executive director of the South Centre, an intergovernmental organisation of developing countries based in Geneva, from 1 March 2009 to 2018. He replaced Dr. Yash Tandon who was t ...
of the Third World Network, Khor, Martin.
The Impact of Trade Liberalisation on Agriculture in Developing Countries: The Experience of Ghana
', Third World Network(2008)
point out that many developing nations have gone from being food independent to being net food importing economies since the 1970s and 1980s
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
(and later the
World Trade Organization The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation in the United Nations System, governments use the organization to establish, revise, and e ...
's
Agreement on Agriculture The Agreement on Agriculture (AoA) is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO on Ja ...
)
free market economics Free may refer to: Concept * Freedom, having the ability to do something, without having to obey anyone/anything * Freethought, a position that beliefs should be formed only on the basis of logic, reason, and empiricism * Emancipate, to proc ...
directives to debtor nations. In opening developing countries to
developed world A developed country (or industrialized country, high-income country, more economically developed country (MEDC), advanced country) is a sovereign state that has a high quality of life, developed economy and advanced technological infrastruct ...
food imports subsidised by Western governments,
developing nations A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...
can become more dependent upon food imports if local agriculture does not improve. While developed countries pressured the developing world to abolish subsidies in the interest of trade liberalization, rich countries largely kept subsidies in place for their own farmers. United States government subsidies for 2008 pushed production toward biofuel rather than food.


Effects 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. An estimated 100 million tons of grain per year are being redirected from food to fuel. (Total worldwide grain production for 2007 was just over 2000 million tons.) 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 Biofuel is a fuel that is produced over a short time span from biomass, rather than by the very slow natural processes involved in the formation of fossil fuels, such as oil. According to the United States Energy Information Administration (E ...
, amounts to as much maize (Africa's principal food staple) as an African person consumes in an entire year. Brazil, the world's second largest producer of ethanol after the US, is considered to have the world's first sustainable biofuels economy and its government claims Brazil's sugar cane based ethanol industry has not contributed to the 2008 food crises. A
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
policy research working paper released in July 2008Policy Research Working Paper No. 4682. Disclaimer: This paper reflects the findings, interpretation, and conclusions of the authors, and do not necessarily represent the views of the World Bank concluded that "...large increases in biofuels production in the United States and Europe are the main reason behind the steep rise in global food prices", and also stated that "Brazil's sugar-based ethanol did not push food prices appreciably higher". An economic assessment published in July 2008 by the
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
disagrees with the World Bank report regarding the negative effects of subsidies and trade restrictions, finding that the effect of biofuels on food prices are much smaller. A report released by
Oxfam Oxfam is a British-founded confederation of 21 independent charitable organizations focusing on the alleviation of global poverty, founded in 1942 and led by Oxfam International. History Founded at 17 Broad Street, Oxford, as the Oxford Co ...
in June 2008 Report available in pdf criticized biofuel policies of rich countries and concluded that, of all biofuels available in the market, Brazilian sugarcane ethanol is "far from perfect" but it is the most favorable biofuel in the world in term of cost and GHG balance. The report discusses some existing problems and potential risks and asks the Brazilian government for caution to avoid jeopardizing its environmental and social sustainability. The report also says that: "Rich countries spent up to $15 billion last year supporting biofuels while blocking cheaper Brazilian ethanol, which is far less damaging for global
food security Food security speaks to the availability of food in a country (or geography) and the ability of individuals within that country (geography) to access, afford, and source adequate foodstuffs. According to the United Nations' Committee on World F ...
." (See
Ethanol fuel in Brazil Brazil is the world's second largest producer of ethanol fuel. Brazil and the United States have led the industrial production of ethanol fuel for several years, together accounting for 85 percent of the world's production in 2017. Brazil produc ...
) German Chancellor
Angela Merkel Angela Dorothea Merkel (; ; born 17 July 1954) is a German former politician and scientist who served as Chancellor of Germany from 2005 to 2021. A member of the Christian Democratic Union (CDU), she previously served as Leader of the Oppo ...
said the rise in food prices is due to poor agricultural policies and changing eating habits in developing nations, not biofuels as some critics claim. On 29 April 2008, US President
George W. Bush George Walker Bush (born July 6, 1946) is an American politician who served as the 43rd president of the United States from 2001 to 2009. A member of the Republican Party, Bush family, and son of the 41st president George H. W. Bush, he ...
declared during a press conference that "85 percent of the world's food prices are caused by weather, increased demand and energy prices", and recognized that "15 percent has been caused by ethanol". On 4 July 2008, ''
The Guardian ''The Guardian'' is a British daily newspaper. It was founded in 1821 as ''The Manchester Guardian'', and changed its name in 1959. Along with its sister papers ''The Observer'' and ''The Guardian Weekly'', ''The Guardian'' is part of the Gu ...
'' reported that a leaked World Bank report estimated the rise in food prices caused by biofuels to be 75%. This report was officially released in July 2008. Since reaching record high prices in June 2008, corn prices fell 50% by October 2008, declining sharply together with other commodities, including oil. As ethanol production from corn has continued at the same levels, some have argued this trend shows the belief that the increased demand for corn to produce ethanol was mistaken. "Analysts, including some in the ethanol sector, say ethanol demand adds about 75 cents to $1.00 per bushel to the price of corn, as a rule of thumb. Other analysts say it adds around 20 percent, or just under 80 cents per bushel at current prices. Those estimates hint that $4 per bushel corn might be priced at only $3 without demand for ethanol fuel." These industry sources consider that a
speculative bubble An economic bubble (also called a speculative bubble or a financial bubble) is a period when current asset prices greatly exceed their intrinsic valuation, being the valuation that the underlying long-term fundamentals justify. Bubbles can be c ...
in the
commodity markets A commodity market is a market that trades in the primary economic sector rather than manufactured products, such as cocoa, fruit and sugar. Hard commodities are mined, such as gold and oil. Futures contracts are the oldest way of investing i ...
holding positions in corn
futures Futures may mean: Finance *Futures contract, a tradable financial derivatives contract *Futures exchange, a financial market where futures contracts are traded * ''Futures'' (magazine), an American finance magazine Music * ''Futures'' (album), a ...
was the main driver behind the observed hike in corn prices affecting food supply. Second- and third-generation biofuels (such as
cellulosic ethanol Cellulosic ethanol is ethanol (ethyl alcohol) produced from cellulose (the stringy fiber of a plant) rather than from the plant's seeds or fruit. It can be produced from grasses, wood, algae, or other plants. It is generally discussed for use as a ...
and
algae fuel Algae fuel, algal biofuel, or algal oil is an alternative to liquid fossil fuels that uses algae as its source of energy-rich oils. Also, algae fuels are an alternative to commonly known biofuel sources, such as corn and sugarcane. When made fr ...
, respectively) may someday ease the competition with food crops, as 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 A mature technology is a technology that has been in use for long enough that most of its initial faults and inherent problems have been removed or reduced by further development. In some contexts, it may also refer to technology that has not se ...
and the maize crop can be shifted between food and fuel use quickly.


Biofuel subsidies in the US and the EU

The World Bank lists the effect of biofuels as an important contributor to higher food prices. The
FAO The Food and Agriculture Organization of the United Nations (FAO)french: link=no, Organisation des Nations unies pour l'alimentation et l'agriculture; it, Organizzazione delle Nazioni Unite per l'Alimentazione e l'Agricoltura is an intern ...
/ECMB has reported that world land usage for agriculture has declined since the 1980s, and subsidies outside the United States and EU have dropped since the year 2004, leaving supply, while sufficient to meet 2004 needs, vulnerable when the United States began converting agricultural commodities to
biofuels Biofuel is a fuel that is produced over a short time span from biomass, rather than by the very slow natural processes involved in the formation of fossil fuels, such as oil. According to the United States Energy Information Administration (E ...
. According to the
United States Department of Agriculture The United States Department of Agriculture (USDA) is the United States federal executive departments, federal executive department responsible for developing and executing federal laws related to farming, forestry, rural economic development, ...
(USDA), global wheat imports and stocks have decreased, domestic consumption has stagnated, and world wheat production has decreased from 2006 to 2008. In the United States, government subsidies for ethanol production have prompted many farmers to switch to production for biofuel. Maize is the primary crop used for the production of ethanol, with the United States being the biggest producer of maize ethanol. As a result, 23 percent of United States maize crops were being used for ethanol in 2006–2007 (up from 6 percent in 2005–2006), and the USDA expects the United States to use 81 million tons of maize for ethanol production in the 2007–2008 season, up 37 percent. This not only diverts grains from food, but it diverts agricultural land from food production. Nevertheless, supporters of ethanol claim that using
corn Maize ( ; ''Zea mays'' subsp. ''mays'', from es, maíz after tnq, mahiz), also known as corn (North American and Australian English), is a cereal grain first domesticated by indigenous peoples in southern Mexico about 10,000 years ago. Th ...
for ethanol is not responsible for the worst
food riot Food riots may occur when there is a shortage and/or unequal distribution of food. Causes can be food price rises, harvest failures, incompetent food storage, transport problems, food speculation, hoarding, poisoning of food, or attacks by pes ...
s in the world, many of which have been caused by the price of rice and oil, which are not affected by biofuel use but rather by supply and demand. However, a World Bank policy research working paper released in July 2008 says that
biofuel Biofuel is a fuel that is produced over a short time span from biomass, rather than by the very slow natural processes involved in the formation of fossil fuels, such as oil. According to the United States Energy Information Administration (E ...
s have raised food prices between 70 and 75 percent. The study found that higher oil prices and a weak dollar explain 25–30% of total price rise. The "month-by-month" five-year analysis disputes that increases in global grain consumption and droughts were responsible for price increases, reporting that this had had only a marginal effect and instead argues that the EU and US drive for biofuels has had by far the biggest effect on food supply and prices. The paper concludes that increased production of biofuels in the US and EU were supported by subsidies and tariffs on imports, and considers that without these policies, price increases would have been smaller. This research also concluded that Brazil's sugar cane based ethanol has not raised sugar prices significantly, and suggest to remove tariffs on ethanol imports by both the US and EU, to allow more efficient producers such as Brazil and other developing countries to produce ethanol profitably for export to meet the mandates in the EU and the US. The Renewable Fuel Association (RFA) published a rebuttal based on the version leaked before the formal release of the World Bank's paper. The RFA critique considers that the analysis is highly subjective and that the author "estimates the effect of global food prices from the weak dollar and the direct and indirect effect of high petroleum prices and attributes everything else to biofuels". An economic assessment report also published in July 2008 by the
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
Disclaimer: This work was published under the responsibility of the Secretary-General of the OECD. The views expressed and conclusions reached do not necessarily correspond to those of the governments of OECD member countries. agrees with the World Bank report regarding the negative effects of subsidies and trade restrictions, but found that the effect of biofuels on food prices are much smaller. The OECD study is also critical of the limited reduction of GHG emissions achieved from biofuels produced in Europe and North America, concluding that the current biofuel support policies would reduce greenhouse gas emissions from transport fuel by no more than 0.8 percent by 2015, while Brazilian ethanol from sugar cane reduces greenhouse gas emissions by at least 80 percent compared to fossil fuels. The assessment calls on governments for more open markets in biofuels and feedstocks to improve efficiency and lower costs.


Idled farmland

According to the ''New York Times'' on 9 April 2008, the United States government pays farmers to idle their cropland under a conservation program. This policy reached a peak of idled in 2007, that is 8% of cropland in United States, representing a total area bigger than the state of New York.


Agricultural subsidies

The global food crisis has renewed calls for removal of distorting
agricultural subsidies An agricultural subsidy (also called an agricultural incentive) is a government incentive paid to agribusinesses, agricultural organizations and farms to supplement their income, manage the supply of agricultural commodities, and influence the ...
in developed countries. Support to farmers in OECD countries totals US$280 billion annually, which compares to official development assistance of just US$80 billion in 2004, and farm support depresses global food prices, according to OECD estimates. These
agricultural subsidies An agricultural subsidy (also called an agricultural incentive) is a government incentive paid to agribusinesses, agricultural organizations and farms to supplement their income, manage the supply of agricultural commodities, and influence the ...
lead to underdevelopment in rural developing countries, including the least developed countries; meanwhile subsidised food increases
overconsumption Overconsumption describes a situation where a consumer overuses their available goods and services to where they can't, or don't want to, replenish or reuse them. In microeconomics, this may be described as the point where the marginal cost of a ...
in developed countries. The US Farm Bill brought in by the Bush Administration in 2002 increased agricultural subsidies by 80% and cost the US taxpayer US$190 billion. In 2003, the EU agreed to extend the
Common Agricultural Policy The Common Agricultural Policy (CAP) is the agricultural policy of the European Union. It implements a system of agricultural subsidies and other programmes. It was introduced in 1962 and has since then undergone several changes to reduce the ...
until 2013. Former UNDP Administrator Malloch Brown renewed calls for reform of the farm subsidies such as the CAP.


Distorted global rice market

Japan is forced to import more than 767,000 tons of rice annually from the United States, Thailand, and other countries due to
WTO The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation in the United Nations System, governments use the organization to establish, revise, and e ...
rules, although Japan produces over 100% of domestic rice consumption needs with 11 million tons produced in 2005 while 8.7 million tons were consumed in 2003–2004 period. Japan is not allowed to re-export this rice to other countries without approval. This rice is generally left to rot and then used for
animal feed Animal feed is food given to domestic animals, especially livestock, in the course of animal husbandry. There are two basic types: fodder and forage. Used alone, the word ''feed'' more often refers to fodder. Animal feed is an important input to ...
. Under pressure, the United States and Japan are poised to strike a deal to remove such restrictions. It is expected 1.5 million tons of high-grade American rice will enter the market soon.


Crop shortfalls from natural disasters

Several distinct weather- and climate-related incidents have caused disruptions in crop production. Perhaps the most influential is the extended drought in Australia, in particular the fertile Murray-Darling Basin, which produces large amounts of wheat and rice. The drought has caused the annual rice harvest to fall by as much as 98% from pre-drought levels. Australia is historically the second-largest exporter of wheat after the United States, producing up to 25 million tons in a good year, the vast majority for export. However, the 2006 harvest was 9.8 million. Other events that have negatively affected the price of food include the 2006 heat wave in California's
San Joaquin Valley The San Joaquin Valley ( ; es, Valle de San Joaquín) is the area of the Central Valley of the U.S. state of California that lies south of the Sacramento–San Joaquin River Delta and is drained by the San Joaquin River. It comprises seven c ...
, which killed large numbers of farm animals, and unseasonable 2008 rains in
Kerala Kerala ( ; ) is a state on the Malabar Coast of India. It was formed on 1 November 1956, following the passage of the States Reorganisation Act, by combining Malayalam-speaking regions of the erstwhile regions of Cochin, Malabar, South ...
, India, which destroyed swathes of grain. These incidents are consistent with the effects of
climate change In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to E ...
. The effects of
Cyclone Nargis Extremely Severe Cyclonic Storm Nargis ( my, နာဂစ်, ur, نرگس ) was an extremely destructive and deadly tropical cyclone that caused the worst natural disaster in the recorded history of Myanmar during early May 2008. The cyclone m ...
on Burma in May 2008 caused a spike in the price of rice. Burma has historically been a rice exporter, though yields have fallen as government
price controls Price controls are restrictions set in place and enforced by governments, on the prices that can be charged for goods and services in a market. The intent behind implementing such controls can stem from the desire to maintain affordability of good ...
have reduced incentives for farmers. The
storm surge A storm surge, storm flood, tidal surge, or storm tide is a coastal flood or tsunami-like phenomenon of rising water commonly associated with low-pressure weather systems, such as cyclones. It is measured as the rise in water level above the n ...
inundated rice paddies up to inland in the
Irrawaddy Delta The Irrawaddy Delta or Ayeyarwady Delta lies in the Irrawaddy Division, the lowest expanse of land in Myanmar that fans out from the limit of tidal influence at Myan Aung to the Bay of Bengal and Andaman Sea, to the south at the mouth of the A ...
, raising concern that the salt could make the fields infertile. The FAO had previously estimated that Burma would export up to 600,000 tons of rice in 2008, but concerns were raised in the cyclone's aftermath that Burma may be forced to import rice for the first time, putting further upward pressure on global rice prices."Cyclone fuels rice price increase"
''BBC News'', 7 May 2008
Stem rust Stem rust, also known as cereal rust, black rust, red rust or red dust, is caused by the fungus ''Puccinia graminis'', which causes significant disease in cereal crops. Crop species that are affected by the disease include bread wheat, durum w ...
reappeared in 1998 in Uganda (and possibly earlier in Kenya)An assessment of race UG99 in Kenya and Ethiopia and the potential for impact in neighbouring regions and beyond
By expert panel on the stem-rust outbreak in Eastern Africa. 29 May 2005.
with the particularly virulent
UG99 Ug99 is a lineage of wheat stem rust (''Puccinia graminis'' f. sp. ''tritici''), which is present in wheat fields in several countries in Africa and the Middle East and is predicted to spread rapidly through these regions and possibly further afie ...
fungus. Unlike other rusts, which only partially affect crop yields, UG99 can bring 100% crop loss. Up to 80% yield losses were recently recorded in Kenya.Effect of a new race on wheat production/use of fungicides and its cost in large vs small scale farmers, situation of current cultivars. Kenya Agricultural Research Institute, 2005. Njoro. Cited i
CIMMYT 2005 study
As of 2005 stem rust was still believed to be "largely under control worldwide except in Eastern Africa". But by January 2007 an even more virulent strain had gone across the Red Sea into Yemen. FAO first reported on 5 March 2008 that Ug99 had now spread to major wheat-growing areas in Iran.http://www.fao.org/newsroom/en/news/2008/1000805/index.html First report of wheat stem rust, strain Ug99, in Iran These countries in North Africa and Middle East consume over 150% of their own wheat production; the failure of this staple crop thus adds a major burden on them. The disease is now expected to spread over China and the Far-East. The strong international collaboration network of research and development that spread disease-resistant strains some 40 years ago and started the
Green Revolution The Green Revolution, also known as the Third Agricultural Revolution, was a period of technology transfer initiatives that saw greatly increased crop yields and agricultural production. These changes in agriculture began in developed countrie ...
, known as
CGIAR CGIAR (formerly the Consultative Group for International Agricultural Research) is a global partnership that unites international organizations engaged in research about food security. CGIAR research aims to reduce rural poverty, increase food ...
, was since slowly starved of research funds because of its own success and is now too atrophied to swiftly react to the new threat.


Soil and productivity losses

Sundquist points out that large areas of croplands are lost year after year, due mainly to
soil erosion Soil erosion is the denudation or wearing away of the upper layer of soil. It is a form of soil degradation. This natural process is caused by the dynamic activity of erosive agents, that is, water, ice (glaciers), snow, air (wind), plants, and ...
, water depletion and urbanisation. According to him "60,000 km2/year of land becomes so severely degraded that it loses its productive capacity and becomes wasteland", and even more are affected to a lesser extent, adding to the crop supply problem. Additionally, agricultural production is also lost due to Water crisis, water depletion. Northern China in particular has depleted much of its non-renewables aquifers, which now impacts negatively its crop production. Urbanisation is another, smaller, difficult to estimate cause of annual cropland reduction.


Rising levels of ozone

One possible environmental factor in the food price crisis is rising background levels of ground-level tropospheric ozone in the atmosphere. Plants have been shown to have a high sensitivity to ozone levels, and lower yields of important food crops, such as wheat and soybeans, may have been a result of elevated ozone levels. Ozone levels in the Yangtze Delta were studied for their effect on oilseed rape, a member of the cabbage family that produces one-third of the vegetable oil used in China. Plants grown in chambers that controlled ozone levels exhibited a 10–20 percent reduction in size and weight (biomass) when exposed to elevated ozone levels. Production of seeds and oil was also reduced. The Chinese authors of this study also reported that rice grown in chambers that controlled ozone levels exhibited a 14 to 20 percent reduction in biomass yield when exposed to ozone levels over 25 times higher than was normal for the region.


Rising prices

From the beginning of 2007 to early 2008, the prices of some of the most basic international food commodities increased dramatically on international markets. The international market price of wheat doubled from February 2007 to February 2008 hitting a record high of over US$10 a bushel. Rice prices also reached ten-year highs. In some nations, milk and meat prices more than doubled, while soy (which hit a 34-year high price in December 2007) and maize prices have increased dramatically. Total food import bills rose by an estimated 25% for developing countries in 2007. Researchers from the Overseas Development Institute have suggested this problem will be worsened by a likely fall in food aid. As food aid is programmed by budget rather than volume, rising food prices mean that the World Food Programme (WFP) needs an extra $500 million just to sustain the current operations.Rising Food Prices: A Global Crisis
Overseas Development Institute, 22 April 2008.
To ensure that food remains available for their domestic populations and to combat dramatic price inflation, major rice exporters, such as China, Brazil, India, Indonesia, Vietnam, Cambodia and Egypt, imposed strict export bans on rice. Conversely, several other nations, including Argentina, Ukraine, Russia, and Serbia either imposed high tariffs or blocked the export of wheat and other foodstuffs altogether, driving up prices still further for net food importing nations while trying to isolate their internal markets. North Korea suffered from the food crisis to such extent that a North Korean official was quoted in June '08 with saying "Life is more than difficult. It seems that everyone is going to die". This nation however is solely relying on food assistance to cope with the crisis.


In developed countries


United States

A May 2008 national survey found that food banks and pantries across the US were being forced to cut back on food distribution as 99 percent of respondents reported an increase in the number of people requesting services. Rising food and fuel prices, inadequate food stamp benefits, unemployment, underemployment, and rent or mortgage costs were factors reported as forcing an average of 15–20 percent more people. Compounding this issue, USDA bonus foods have declined by $200 million and local food donations were down nationally about 9 percent over the same period. According to the California Association of Food Banks, which is an umbrella organization of nearly all food banks in the state, food banks are at the "beginning of a crisis".


Effects on farmers

If global price movements are transmitted to local markets, farmers in the developing world could benefit from the rising price of food. According to researchers from the Overseas Development Institute, this may depend on farmers' capacity to respond to changing market conditions. Experience suggests that farmers lack the credit and inputs needed to respond in the short term. In the medium or long term, however, they could benefit, as seen in the Asian
Green Revolution The Green Revolution, also known as the Third Agricultural Revolution, was a period of technology transfer initiatives that saw greatly increased crop yields and agricultural production. These changes in agriculture began in developed countrie ...
or in many African countries in the recent past.


Relationship with 2008 Chinese milk scandal

As grain prices increased, China's numerous small-holding milk farmers, as well as producers of feed for cattle, were unable to exist economically. As a result, they turned to putting additives into the feed and milk, including melamine, to boost the measured level of protein. Hundreds of thousands of children became ill, China's milk exports virtually ended, executives and officials were arrested and some executed, and companies went bankrupt.China milk scandal: Families of sick children fight to find out true scale of the problem – Telegraph
Malcolm Moore, photos Daniel Traub, 2008 03 12, via www.telegraph.co.uk on 2010 11 10


Unrest and government actions in individual countries and regions

The price rises affected parts of Economy of Asia, Asia and Economy of Africa, Africa particularly severely with Burkina Faso, Cameroon, Senegal, Mauritania, Côte d'Ivoire, Egypt and Morocco seeing protests and List of riots, riots in late 2007 and early 2008 over the unavailability of basic food staples. Other countries that have seen food riots or are facing related unrest are: Mexico, Bolivia, Yemen, Uzbekistan, Bangladesh, Pakistan, Sri Lanka, and South Africa.


Tunisia

Popular protests plagued Gafsa and other rural towns in the country of Tunisia in 2008 against the deaths of 2 miners and high unemployment rates in the government. Anti-government riots was suppressed and unfortunately, 2 lost their lives. Unemployed demonstrators and food shortages protests erupted in towns near Gafsa in inspiration but was suppressed harshly.


Morocco

A popular movement unfolded as a series of violent at times but nonviolent demonstrations and events throughout Morocco in 2007-2008 after strikes took place. Unfortunately, during riots in Sidi Ifni, 10 demonstrators lost their lives after police cursed the protests in June 2008. In November–December, a wave of strikes and protests and violence hit the country as scattered protests broke out against food prices and shortages. The movement was quelled violently with a swift response by the authorities.


Bangladesh

10,000 workers rioted close to the Bangladeshi capital Dhaka, smashing cars and buses and vandalising factories in anger at high food prices and low wages. Dozens of people, including at least 20 police officials, were injured in the violence. Ironically, the country achieved food self-sufficiency in 2002, but food prices increased drastically due to the reliance of agriculture on oil and fossil fuels. Economists estimate 30 million of the country's 150 million people could go hungry.


Brazil

In April 2008, the Brazilian government announced a temporary ban on the export of rice. The ban was intended to protect domestic consumers.


Burkina Faso

One of the earlier food riots took place in Burkina Faso, on 22 February, when rioting broke out in the country's second and third largest cities over soaring food prices (up to a 65 percent increase), sparing the capital, Ouagadougou, where soldiers were mobilized throughout strategic points. The government promised to lower taxes on food and to release food stocks. Over 100 people were arrested in one of the towns. Related policy actions of the Burkinabe government included: * The removal of customs duty on rice, salt, dairy-based products and baby foods * The removal of value added tax on durum wheat, baby foods, soap and edible oils * Establishing negotiated prices with wholesalers for sugar, oil and rice * Releasing food stocks * Strengthening of community grain banks * Food distribution in-kind * Reduction of electricity cost, partial payment of utility bills for the poor * Enacting special programs for schools and hospitals * Fertilizer distribution and production support. A ban was also imposed on exportation of cereals.


Cameroon

Cameroon, the world's fourth largest Cocoa bean, cocoa producer, saw large scale rioting in late February 2008 in Douala, the country's commercial capital. Protesters were against inflating food and fuel prices, as well as the attempt by President Paul Biya to extend his 25-year rule. Protesters set up barricades, burned tires, and targeted businesses that they believed belonged to the Biya family, high members of the ruling party, the government, or France. It became the first protest in the nation's history in which minute- by-minute events were covered by social media. By 27 February, a strike was taking place in thirty-one cities, including Yaoundé, Douala, Bamenda, Bafoussam, Buea, Limbe, Tiko, Muea, Mutengene, and Kumba. At least seven people were killed in the worst unrest seen in the country in over fifteen years. This figure was later increased to 24.Time; Food Prices:What went wrong (16 June 2008) Youths were mobilized in ways that had not been seen since the days of the villes mortes. Part of the government response to the protests was a reduction in import taxes on foods including rice, flour, and fish. The government reached an agreement with retailers by which prices would be lowered in exchange for the reduced import taxes. As of late April 2008, however, reports suggested that prices had not eased and in some cases had even increased. On 24 April 2008, the government of Cameroon announced a two-year emergency program designed to double Cameroon's food production and achieve food self-sufficiency.


Côte d'Ivoire

On 31 March, Côte d'Ivoire's capital Abidjan saw police use tear gas and a dozen protesters injured following food riots that gripped the city. The riots followed dramatic hikes in the price of food and fuel, with the price of beef rising from US$1.68 to $2.16 per kilogram, and the price of gasoline rising from $1.44 to $2.04 per liter, in only three days.


Egypt

In Egypt, a boy was killed from a gunshot to the head after Egyptian police intervened in violent demonstrations over rising food prices that gripped the industrial city of El-Mahalla El-Kubra, Mahalla on 8 April 2008. Large swathes of the population have been hit as food prices, and particularly the price of bread, have doubled over the last several months as a result of producers exploiting a shortage that has existed since 2006.


Ethiopia

Drought and the food price crisis threatened thousands in Ethiopia.


Haiti

On 12 April 2008, the Haitian Senate voted to dismiss Prime Minister Jacques-Édouard Alexis after violent food riots hit the country. The food riots caused the death of five people. Prices for food items such as rice, beans, fruit and condensed milk have gone up 50 percent in Haiti since late 2007 while the price of fuel has tripled in only two months. Riots broke out in April due to the high prices, and the government had been attempting to restore order by subsidizing a 15 percent reduction in the price of rice.


India

India has banned the export of rice except for basmati which attracts a premium price. The ban has since been removed, and India now exports a variety of rice.


Indonesia

Street protests over the price of food took place in Indonesia where food staples and gasoline have nearly doubled in price since January 2008.


Latin America

In April 2008, the Latin American members of the United Nations' FAO met in Brasília to confront the issues of high food prices, scarcities and violence that affect the region.


Mexico

The President of Mexico, Felipe Calderón, with industry representatives and members of the Confederation of Industrial Chambers (Concamin), agreed to freeze prices of more than 150 consumer staples, such as coffee, sardines, tuna, oil, soup or tea, among others, until the end of December 2008. The measure was carried out in an attempt to control inflation, which stood at an annual rate of 4.95%, the highest increase since December 2004. Mexican baking company Grupo Bimbo's CEO, Daniel Servitje, announced in the 19th Plenary Meeting of the Mexico–China Business Committee that Bimbo agreed to freeze their product prices, despite a 20% rise in production costs. Bimbo is one of the most important baking companies worldwide, having recently expanded to China. Bimbo has also acquired five bakeries in the United States and Canada.


Mozambique

In mid February, rioting that started in the Mozambican rural town of Chokwe, Mozambique, Chokwe and then spread to the capital, Maputo, has resulted in at least four deaths. The riots were reported in the media to have been, at least in part, over food prices and were termed "food riots". A biofuel advocacy publication, however, claimed that these were, in fact, "fuel riots", limited to the rise in the cost of diesel, and argued that the "food riot" characterization worked to fan "anti-biofuels sentiment".


Pakistan

The Pakistan Army has been deployed to avoid the seizure of food from fields and warehouses. This hasn't stopped the food prices from increasing. The new government has been blamed for not managing the countries food stockpiles properly.


Myanmar

Once the world's top rice producer, has produced enough rice to feed itself until now. Rice exports dropped over four decades from nearly 4 million tons to only about 40,000 tons last year, mostly due to neglect by Myanmar's ruling generals of infrastructure, including irrigation and warehousing. On 3 May 2008
Cyclone Nargis Extremely Severe Cyclonic Storm Nargis ( my, နာဂစ်, ur, نرگس ) was an extremely destructive and deadly tropical cyclone that caused the worst natural disaster in the recorded history of Myanmar during early May 2008. The cyclone m ...
stripped Myanmar's rice-growing districts, ruining large areas with salt water. U.N. Food and Agriculture Organization estimates that these areas produce 65 percent of Myanmar's rice. Worries of long-term food shortages and rationing are rife. The military regime says nothing about the rice crisis, but continues to export rice at the same rate. "...at least the next two harvests are going to be greatly affected and there'll be virtually no output from those areas during that time. So we're likely to see considerable food and rice shortages for the next couple of years. The damage to the economy is going to be profound." said economist and Myanmar expert Sean Turnell, of Australia's Macquarie University. (interviewed in "The Irriwaddy", Tuesday, 27 May 2008)


Panama

In Panama, in response to higher rice prices the government began buying rice at the high market price and selling rice to the public at a lower subsidized price at food kiosks.


Philippines

In the Philippines, the Gloria Macapagal Arroyo, Arroyo government insisted on 13 April that there would be no food riots in the country and that there could be no comparison with Haiti's situation. Chief Presidential Legal Counsel, Sergio Apostol stated that: "Haiti is not trying to solve the problem, while we are doing something to address the issue. We don't have a food shortage. So, no comparison..." Comments by the Justice Secretary, Raul M. Gonzalez, Raul Gonzalez, the following day, that food riots are not far fetched, were quickly rebuked by the rest of the government. On 15 April, the Philippines, the world's largest rice importer, urged China, Japan, and other key Asian nations, to convene an emergency meeting, especially taking issue with those countries' rice export bans. "Free trade should be flowing", Philippine Agriculture Secretary Arthur Yap stated. In late April 2008, the Philippines government requested that the World Bank exert pressure on rice exporting countries to end export restrictions.


Russia

The Russian government pressured retailers to freeze food prices before key elections for fear of a public backlash against the rising cost of food in October 2007. The freeze ended on 1 May 2008.


Senegal

On 31 March 2008, Senegal had riots in response to the rise in the price of food and fuel. Twenty-four people were arrested and detained in a response that one local human rights group claimed included "torture" and other "unspeakable acts" on the part of the security forces. Further protests took place in Dakar on 26 April 2008.


Somalia

Riots in Somalia occurred on 5 May 2008 over the price of food, in which five protesters were killed. The protests occurred amid a serious humanitarian emergency due to the Somalia War (2006–2009), Ethiopian war in Somalia.


Tajikistan

In 2008, ''The Christian Science Monitor'', neweurasia, and other media observers predicted that a nascent hunger crisis would erupt into a full famine as a consequence of 2008 Central Asia energy crisis, energy shortages at the time. UN experts announced on 10 October that almost one-third of Tajikistan's 6.7 million inhabitants were at risk of running out of food during the winter of 2008–09.


Yemen

Food riots in southern Yemen that began in late March and continued through early April, saw police stations torched, and roadblocks were set up by armed protesters. The army has deployed tanks and other military vehicles. Although the riots involved thousands of demonstrators over several days and over 100 arrests, officials claimed no fatalities; residents, however, claimed that at least one of the fourteen wounded people has died.


Projections and early mitigation efforts

The FAO released a study in December 2007 projecting a 49 percent increase in African cereal prices, and 53 percent in European prices, through July 2008. In April 2008, the World Bank, in combination with the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
, announced a series of measures aimed at mitigating the crisis, including increased loans to African farmers and emergency monetary aid to badly affected areas such as Haiti. According to FAO director Jacques Diouf, however, the World Food Programme needed an immediate cash injection of at least $1700 million, far more than the tens of million-worth in measures already pledged. On 28 April 2008, the United Nations Secretary-General Ban Ki-moon established a Task Force on the Global Food Security Crisi

under his chairmanship and composed of the heads of the United Nations specialized agencies, funds and programmes, Bretton Woods institutions and relevant parts of the UN Secretariat to co-ordinate efforts to alleviate the crisis.


After the crisis

2013 research concluded that the spike was the result of an unusual combination of circumstances and prices in the future will be higher than before the spike, depending on oil prices,
climate change In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to E ...
, and future diets. WDM noted in 2010 that after the spike in prices in 2008, prices of wheat, maize and rice lowered but were still higher than before the crisis. The impacts of the spike on poor people were concentrated in low-income countries and may have been less severe than once thought, thanks to rising rural wages in some countries. The researchers called on developing countries to ensure good data on the key indicators of distress and to strengthen social protection, and on those involved in international development to continue increasing focus on reducing child malnutrition and stimulating agricultural development.


Actions by governments

IFAD is making up to US$200 million available to support poor farmers boost food production in face of the global food crisis. On 2 May 2008, US President
George W. Bush George Walker Bush (born July 6, 1946) is an American politician who served as the 43rd president of the United States from 2001 to 2009. A member of the Republican Party, Bush family, and son of the 41st president George H. W. Bush, he ...
said he was asking Congress to approve an extra $770 million funding for international food aid. On 16 October 2008, in a speech at a United Nations gathering on World Food Day, former US president Bill Clinton criticized the bipartisan coalition in Congress that blocked efforts to make some aid donations in cash rather than in food. Referring in part to policies that had pressured African governments to reduce subsidies for fertilizer and other agricultural inputs, Clinton also said:
We need the World Bank, the IMF, all the big foundations, and all the governments to admit that, for 30 years, we all blew it, including me when I was President. We were wrong to believe that food was like some other product in international trade, and we all have to go back to a more responsible and sustainable form of agriculture.
The release of Japan's rice reserves onto the market may bring the rice price down significantly. As of 16 May, anticipation of the move had already lowered prices by 14% in a single week. On 30 April 2008, Thailand announced an agreement in principle to create the Organization of Rice Exporting Countries (OREC) with the potential to develop a price-fixing cartel for rice. In June 2008 the FAO hosted a High-Level Conference on World Food Security (2008), High-Level Conference on World Food Security, in which $1.2 billion in food aid was committed for the 75 million people in 60 countries hardest hit by rising food prices. In June 2008, a sustained commitment from the G8 was called for by some humanitarian organizations.


Food price decreases

In December 2008, the Late-2000s recession, global economic slowdown, 2000s energy crisis#Falling prices in late 2008, decreasing oil prices, and speculation of decreased demand for commodities worldwide brought about sharp decreases in the price of staple crops from their earlier highs. Corn prices on the Chicago Board of Trade dropped from US$7.99 per bushel in June to US$3.74 per bushel in mid-December; wheat and rice prices experienced similar decreases. The UN's Food and Agriculture Organization, however, warned against "a false sense of security", noting that the subprime mortgage crisis, credit crisis could cause farmers to reduce plantings. FAO convened a World Summit on Food Security at its headquarters in Rome in November 2008, noting that food prices remained high in developing countries and that the global
food security Food security speaks to the availability of food in a country (or geography) and the ability of individuals within that country (geography) to access, afford, and source adequate foodstuffs. According to the United Nations' Committee on World F ...
situation has worsened. By early 2010, food prices had risen again to surpass the record highs of 2008. Some commentators saw this as the resumption of the price spike seen in 2007–08. Prices had dropped after good weather helped increase grain yields while demand had dropped due to the recession.


See also

* 2000s commodities boom *
Agreement on Agriculture The Agreement on Agriculture (AoA) is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO on Ja ...
* Agribusiness * 2020s commodities boom


References


External links


Food and Agriculture Organization FAO World Food Situation Portal
Food and Agriculture Organization The Food and Agriculture Organization of the United Nations (FAO)french: link=no, Organisation des Nations unies pour l'alimentation et l'agriculture; it, Organizzazione delle Nazioni Unite per l'Alimentazione e l'Agricoltura is an intern ...
*
FAO Global Information and Early Warning System

World Summit on Food Security 2009

Reuters
– Special Coverage: Agflation
International Food Policy Research Institute
– Research Area: Food Prices
Research Brief: State of Food Insecurity & Opportunities in Muslim Countries
– DinarStandard Research Brief
Anti-Hunger Protests Rock Haiti
2008. North American Congress on Latin America, by Jeb Sprague

from Reuters AlertNet
The Food Bubble: How Wall Street Starved Millions and Got Away With It
– video report with Frederick Kaufman by ''Democracy Now!'' {{DEFAULTSORT:2007-2008 world food price crisis 2000s economic history 2007 in economics, World food price crisis 2008 in economics, World food price crisis Biofuels Economic crises Economy of Africa Economic history of Asia Energy crops Food politics Great Recession