Food prices: a looming crisis?
The cost of food is of constant concern for many of the world’s poorest people. Food prices are once again on the rise, passing the levels reached during the crisis of 2007-08 that pushed the number of hungry people in the world over 1 billion.
We are not experiencing a major crisis on the scale of 2007-08 – yet. But millions of people’s lives are at risk.
Poor people in developing countries spend between 50-80% of their income on food, making higher prices, as well as unpredictable prices, a serious threat to their ability to eat – let alone continue spending on other basic needs such as health, or education. A great majority of these people make their living from agriculture. But they are excluded from the benefits of higher prices because they are too poor.
Limited or no access to land, credit, roads, prevents them from accessing markets to sell their crops. Moreover, inequality of power makes it difficult for them to negotiate fair prices, even while they are faced with increasing costs like fuel or fertilizers.
What is the situation?
Since July 2010, prices of many crops have risen dramatically. Prices of maize, wheat and sugar have all increased by over 70% while rice prices – the staple food for many of the world’s poorest people – have fortunately remained fairly stable.
High and unpredictable food prices are caused by a combination of different factors. Reduced production due to bad weather (caused in part by climate change), increased oil prices that make fertilizer and transport more expensive, increased demand for biofuels which takes land away from food production, export restrictions and the panic buying that can follow, financial speculation and increased demand all have a part to play in pushing up the price of food.
What needs to happen?
Governments must act urgently to prevent rising food prices spiraling out of control – risking the sort of crisis experienced in 2007-08. Governments must in the short term:
- Prevent ongoing unpredictable food prices by increasing support and investments in small scale agriculture to increase certainty in 2011 production.
- Help people living in poverty cope with the immediate effects of high and volatile prices, through social protection programmes
In the long term the root causes of food price increases need to be addressed by giving developing countries space to create the policies needed to promote national food production, increasing investment in agriculture – focused on small farmers and women – and ensuring small scale producers are supported in their efforts to adapt to climate change. Rich countries must come up with sufficient financial means to address both short and long terms needs.