Global food prices hit new record high

Global food prices increased for the eighth consecutive month in February, with prices of all commodity groups monitored rising again, except for sugar, [UN Food and Agriculture Organisation] said today.

What is driving up food prices to record levels?  As I’ve discussed in CP’s food insecurity series, it’s harvests ruined by extreme weather, coupled with rising oil prices, increasing demand from population growth and changing diets in a global market made all the tighter by unsustainable biofuels policies.

The only good news going forward is that the Chinese drought has abated somewhat.

Here’s more from the FAO release:

FAO expects a tightening of the global cereal supply and demand balance in 2010/11. In the face of a growing demand and a decline in world cereal production in 2010, global cereal stocks this year are expected to fall sharply because of a decline in inventories of wheat and coarse grains. International cereal prices have increased sharply with export prices of major grains up at least 70 percent from February last year.

“Unexpected oil price spikes could further exacerbate an already precarious situation in food markets,” said David Hallam, Director of FAO’s Trade and Market Division.

“This adds even more uncertainty concerning the price outlook just as plantings for crops in some of the major growing regions are about to start,” he added.

Unless oil prices come down sharply and soon, it’s likely to get worse before it gets better.

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24 Responses to Global food prices hit new record high

  1. Mark C. says:

    Looks like another hockey stick.

  2. James Giese says:

    Under the “hammer” of climate change and “moving the weather mean” toward more extreme events, we should anticipate continued higher prices for food.

    In the U.S., where we spend less than 20% of household income on food, at least at first, this will have little impact on us. However, over time it will become more and more of an issue.

    The situation in other countries, especially in developing countries, where the proportion of income spent on food is much higher, is already having an impact. At least, some of what is currently happening in the Middle East can be attributed to higher food prices.

    Investment in agriculture has been pitifully low for decades, and as Norman Borlaug once said, “A starving person is difficult to reason with.”

  3. S. Majumder says:

    Here in India typical dinner table discussions used to be ‘it’s getting hotter these days’, ‘people are talking about something called global warming’ followed by ‘the new car by xyz company is really cool’ and ‘cricket’. Now it’s mostly ‘rice just got costlier’, ‘haven’t seen pqr fish in the market for some time, probably it’s extinct’, ‘don’t know if I should buy a car, there has been another petrol price hike’.

    I think this indirectly shows a clear trend.

  4. Colorado Bob says:

    I read a BBC story about the efforts in China , and fighting their drought. The Chinese are drilling 1,000 new wells , but are hitting dry holes. There is a very telling passage in the article …….

    ” The last well the team completed two days ago produced water for just a few minutes, then nothing more came out.

    Deep under the earth China’s water, on its arid northern plain, is slowly running out. It is a massive problem and China is only just starting to face up to it. ”

  5. Tony O'Brien says:

    We still have not seen wheat purchasing by China yet and that would almost be a given. 2011 is going to be a doozy for food prices and it has only just started.

    For data on Australian crops ABARE is probably tops. Only South Australia has done well with the last harvest. WA has drought and Qld. NSW VIC and TAS have had floods.

  6. Joe, you really need to add market speculation to your list of the drivers of food prices. It is pretty clear speculators are a significant factor pushing up prices when FAO says global stocks of grain remain high.

    From a recent article (not one of mine):

    “If you look at FAO’s figures over the past 10 years you can see there is absolutely no relationship between the supply and demand prices. And we get very high prices sometimes when we have more than enough supply.”

    The global food system is very complicated and dominated by a few large players.

  7. Michael Tucker says:

    Currently in America farm land is becoming more expensive. If you can invest in land, seed, water, and ever more expensive fertilizer you might realize a very healthy profit. But a surplus next year can burst that bubble. With speculation, protective tariffs, biofuels, oil price uncertainty, and global climate disruption the global food system is indeed very complicated. But keeping up with demand and nutrition makes the problem scary.

    “…in order to keep up with population growth farmers will have to grow more wheat and maize over the next 40 years than was grown in the previous 500.”

    From a facinating multi-part special report in The Economist.

    Here are just a few bits that caught my interest:

    Regarding obesity – “the obesity epidemic in rich countries presents exactly the opposite problem. For the first time in history, more calories do not mean better health. The epidemic is spreading to less well-off places: Mexico has the second-largest share of obese people after America; Guatemala’s obesity rate has quadrupled in 30 years. The overweight are obviously not troubled by a shortage of food. But a large group of people in rich countries does suffer from nutritional deficiencies: the elderly. They need more calcium and vitamins with advancing age, and many do not get them. Half of those over 75 in hospital are reckoned to be nutrient-deficient, as are many obese people.”

    Regarding nutrition – “In the past 30 or 40 years diets have improved. There are now proportionately fewer malnourished people in the world than there used to be.”

    And, without any further comment the article drops this startling nugget of information: “India is a peculiar exception to this rule: for reasons no one understands, Indians of all income levels now eat less food, and of a lower quality, than they used to, and than you would expect.”

    Regarding food supply and population growth – “…growth in population and demand for food have both slowed down, but crop yields have slowed more. Between 1961 and 1990 wheat yields were rising at nearly 3% a year. During that period the world’s population was growing by an average of 1.8% a year. Between 1990 and 2007 population growth slowed down to 1.4%, but the rise in annual wheat yields slackened to 0.5%. The growth in rice yields between the two periods halved. Yields of mankind’s two most important crops are now almost flat.”

    The conclusion seems to be that we have the potential to provide enough nutritious food to the wealthy countries but it will be much more expensive food. The poor will continue to suffer and feeding them will be problematic.

    Finally a cool map of ‘Hot Spots in Emerging Global Food Crisis’

  8. Peter says:

    If that is the case that speculation is a significant factor that influences food prices then it’s interesting to see that it is not taken any measures to put an end to it. Would it be wrong to think that someone with a lot of power is involved in the speculation. Ref your article Stephen which says that there are a few buyers who account for a very large part of the trade. Do you know who they are? Companies or countries?

  9. Lou Grinzo says:

    One of the biggest and nastiest issues on the international front, and one that has a chance to severely complicate the already messy job of striking a meaningful climate deal, is mentioned in one of Joe’s related posts — the US’ continued use of corn to make ethanol.

    Consider the following four trends:

    1. CC impacts on food production

    2. Population increase

    3. Peak oil (making conventional oil more expensive and foodfuels more desirable and tougher politically to kill off)

    4. The shift in food preferences among millions of people in India and China as they rise out of poverty and want to eat more meat

    Anyone here think that turning massive amounts of food into fuel, and thereby at a bare minimum pushing up world prices even further, just might make the US, how shall I put this, a bit unpopular on the world stage?

  10. Richard Brenne says:

    What are the most important causes, in order, of today’s record-high price of food? My list:

    SPECULATION (Speculative market bidding beyond current supply and demand.)

    OVERCONSUMPTION (More wealthy people eating more beef and other meats that take far more land and other inputs per calorie than plant-based diets.)

    OVERPOPULATION (Even if per capita consumption remained the same, more people means more consumption.)

    CLIMATE CHANGE (Massive category having an impact on most other categories, drought, flooding, erratic weather, often more plant, animal and insect pests and diseases affecting crops.)

    OIL PRICES (Peak Oil now peaking over $100 a barrel, used in almost all farm machinery, global food transport; petroleum is primary feedstock for pesticides.)

    NATURAL GAS (Primary feedstock for fertilizers.)

    AQUIFER DEPLETION (Fossil water that can take thousands of years to replenish, lowering water table a problem in India, China, the U.S. and other places.)

    OTHER FRESHWATER LOSS (Due to losing glacial volume and thus baseline run-off, pollution, increased salinity.)

    INFRASTRUCTURE LOSS (Due to conservatives not wanting to pay taxes for infrastructure, aging, lack of global capital, earthquakes, increasing wave height affecting shipping, storms of all kinds, etc.)

    TOPSOIL LOSS (Due to overuse, poor land-use, deforestation, increased salinity, floods, higher winds, etc.)

    POLLINATOR LOSS (Including Colony Collapse Disorder of Honeybees due to cumulative use of all pesticides, transporting bees, monoculture bee diets like almonds.)

    FARMERS LOSING ACCESS TO CAPITAL (Due to global recession, free market discounting human survival.)

    BIOFUELS (Agricultural land and resources used for fueling SUVs instead of feeding people.)

    OZONE POLLUTION (The cumulative soup of all pollutants globally impacting all tree and plant health, including crops, and yes I put this last to bait Wit’s End into a response.)

    Is there anything you’d add to or subtract from this list?

    How would you rearrange this list (please do) in order of importance from the top down?

    What do you think the order will be in 2020? 2050? 2100?

    -Richard Brenne

  11. K. Nockels says:

    We’ve known for a while now that the great “Green Revolution” was a bust. It didn’t remove hunger from the world it just added more people to area’s that were never going to be able to support those kinds of numbers. Even without Climate Change the policies that promoted it were flawed. Now we are facing agricultural uncertainty on a scale that boggles the mind. The issues of energy, soil destruction, water shortages and population are bad enough, but add to that the extremes of Climate Change and food production has only one way to go, down. We are facing the roller coaster ride from hell both in fossil fuels and food production, but over all there will be less of both from now on.

  12. George Ennis says:

    Interesting post in the Guardian newspaper on what the potential impact of $100 a barrel oil prices on the UK economy. Here is a quote from the article:

    “Climate and Energy Secretary Huhne argued that an $100 (£61) a barrel price for oil transforms the economics of climate change in Britain.”

  13. Merrelyn Emery says:

    Our Minister for Immigration (Oz) has announced an extra 1500 beds for refugees. They are not going to go far once this kicks in, ME

  14. Rod says:

    The writing’s on the wall for mankind now isn’t it !
    Overpopulation coupled with climate change coupled with global weather instability coupled with pollution spells ‘major food crisis’ and it’s imminent. It’s already here now in a lot of countries !
    We don’t have 20/30/40/50 years to wake up to this. We don’t even have 5 years ! The politicians WILL have this crisis on their watch as much as they don’t want it to happen to them.
    Who was it – the UN or WHO that said around mid 2010 that the world has around a 3 week food supply. What is it now pray tell, after all the world has seen since then – a 1 week food reserve ?

    Some 3 billion people are either starving or malnourished now.
    Let’s extrapolate the global crop decimation for the next 12 months (assuming the wild weather continues, which it looks to) and look at the big picture – not pretty is it !
    The problem is that there are no quick fixes for this – it’s all progressed too far now,the time for action has LONG passed.
    Dog eat dog time – look after #1. It’s all you can do…

  15. Mulga Mumblebrain says:

    Richard Brenne #11, that’s a comprehensive list. I’d add pollution by GE organisms, leading to lower yields, and the rise of superweeds, the poisoning of the soil and destruction of microfauna essential to soil vitality, the promotion of fungi outside their natural balance and the emergence of heretofore unseen novel toxic organisms apparently dangerous both to plants and animals, all resulting from the saturation application of Roundup. The commodity speculation, of course, is a by-product of ‘Helicopter’ Ben Bernanke’s frantic efforts to refloat the Wall Street Titanic, and set her sailing for her next rendezvous with the next asset bubble iceberg. So much funny money, conjoured out of thin air, is now sloshing around the world that numerous countries have accused the US of waging economic warfare against them, and what more deadly form of warfare is there than deliberately induced hunger and famine? That the US is using the popular unrest generated by hunger in the Arab world to change the klepto in chief in loyal satrapies (Egypt, Tunisia, (?) Yemen) while keeping the system intact, subvert old enemies (Libya, Iran) and simply ignore repression elsewhere (no ICC referral for Bahraini, Yemeni or Iraqi collaborators) can hardly be doubted. This is classic ‘disaster capitalism’ wreaking havoc to the West’s perceived benefit. They must be praying in Washington that they can continue to control this djinn, but, in the long run, it is a Sisyphean task.

  16. Merrelyn Emery says:

    Rod #15. I have to disagree with your last line. Small groups and/or communities who share resources and look after each other always do better than those with the self interested response.

    After all, putting ourselves first including over the planet is what got us into this pickle in the first place. Its time to change our behaviour and that means we have to change our organizational structures to those that produce cooperation, ME

  17. Mark says:

    Human impact of climate change looked at here:

    “Strongly negative impacts of climate change are predicted in Central America, central South America, the Arabian Peninsula, Southeast Asia and much of Africa. Importantly, the regions of greatest vulnerability are generally distant from the high-latitude regions where the magnitude of climate change will be greatest. Furthermore, populations contributing the most to greenhouse gas emissions on a per capita basis are unlikely to experience the worst impacts of climate change, satisfying the conditions for a moral hazard in climate change policies.”;jsessionid=F621894DEE6FF08EA89F68BD07AC8155.d03t01?systemMessage=Due+to+scheduled+maintenance%2C+access+to+Wiley+Online+Library+will+be+disrupted+on+Saturday%2C+5th+Mar+between+10%3A00-12%3A00+GMT

  18. Leif says:

    Richard and MM, @ 11 & 16: The mind boggles just getting around your list Richard and then MM comes up with an equally devastating list yet both of you left out ~2/3 of the earth’s surface.

    Ocean acidification! This is in no way critical of either of your efforts, only a humble attempt to add to the list and show the immensity of the tasks before us.

    Late last night I posted a Doomer comment and woke early this AM looking for “salvation”?

    All problems are just solutions waiting to be discovered. (Except of course the BIG ONE post tripping point!) No problem can be solved unless it can be defined. So the first problem, IMO, is to define the problem.

    To that end, my humble attempt would ask: How do we structure society in a manor that grants Earth’s population a maximum amount of freedom and ability to prosper, (Not measured in amassing money but in happiness), while at the same time allowing/promoting earth’s life support systems to begin to heal and provide once again?

    Perhaps that could be a subject for debate sometime Joe. (In reality I believe most here try constantly.) The emotional toll of the “daily dooms day outcomes” can be crippling. I know as well from reading the comments that most work tirelessly attempting to make their sphere of influence “whole”, for lack of a better word. It is the only thing that keeps me in the fight…

  19. dbmetzger says:

    From the CBC
    Global Food Prices Reach All-Time High
    A UN agency has warned that global food prices which have already helped spur protests in North African and the Middle East reached new highs in February. The report warns that oil price spikes could provoke further increases.

  20. Richard Brenne says:

    Mulga (#16) – Thanks for those great additions. Evidently Monsatan, as you call them, decided to Roundup all life on Anthro-Earth in a kind of reverse Noah’s Ark and to try to own it all, including all seeds they genetically modify to not reproduce unless certain vines grow to deposit money in Monsatan’s bank account.

    Those selling the process of genetically-modified foods feel it is the only way to grow more food so that we can grow our population to the point where the collapse is even greater. Evidently 7 billion agonizing deaths aren’t enough for them.

    It’s like a free-solo rock climber climbing higher and higher up an endless, Sisyphusian cliff, guaranteeing that the inevitable fall will be from higher still.

    But I’d still hear any credible arguments for positives in growing food and lowering food prices, like the best organic, no-till and hydroponic practices, as well as plans for more equitable food distribution, though these will inevitably have to be more local than global.

  21. Richard Brenne says:

    Leif (#19) – Touché! You’re absolutely right that a big part of the high price of food comes from overfishing, factory trawlers strip-mining the ocean floor, catching, trapping and killing unintended species, introduction of non-native species, algal blooms, ocean anoxia, garbage, all other pollution and ocean warming and ocean acidification killing corral and thus ruining habitat, as well as killing everything with a shell including lobsters, crabs, oysters, clams, shrimp and most of all plankton (some have tiny shells), the base of the marine food chain and the source of half of our atmosphere’s oxygen!

    But other than that everything’s okay.

    Leif, I hear and feel what you feel about all this, but somehow still feel empowered that while we can’t “solve” all this with any conventional thinking, the kind of deep, deep caring you show can lead us to something better, whenever, wherever and however that happens.

  22. Richard L says:

    wow… 5,800 rockets of silver, a toxic metal – I wonder what is the fate/transport of the silver? Does it come down in the rain and remain in the soil? Is it taken up by the crops and eaten by the consumers?
    The province’ s meteorological authorities launched its largest cloud-seeding operation in 20 years by firing 5,800 silver-iodide rockets and flares into the sky to increase rainfall and alleviate the worst drought in six decades.

  23. Prokaryotes says:

    Richard, you might start to imagine how a possible global climate war, so to speak erupts. Each nation trying to manipulate the weather in their own favor.