6 Causes Of High Food Prices

Saturday, April 26th, 2008

food prices

In recent news, the global hotspots for hunger is only getting larger and more diverse. In just a few short months, I’ve heard conspiracy theories from disgrunted ex-employees of large companies who believe they understand the causes of high food prices. In fact, they do not.

To fully comprehend the food prices, it’s necessary to step out of the thinking locally mentality and see it from a global perspective.

High food prices are not caused by greedy supplement companies or the increased demand for pestisides on local farm crops. While that can change the local economy to some extend, it’s but a rain drop in a massive tsumani.

Source: FAO, 2008

The 7 REAL Causes Of High Food Prices:

  1. A sluggish U.S. economy. If the President and company doesn’t want to admit it, that’s fine. But facts speak for themselves. People are buying less.
  2. Record setting crude oil prices and peak U.S. gas prices.
  3. A larger than normal demand for biofuels and a decline in corn inventories.
  4. Drought reduced harvests.
  5. Commodities speculators.
  6. Rising demand for food supplies in massive countries like China and India.

Out of all the expert theories, reason #6 will continue to make the biggest long-term impact. As China and India start to demand more foods (eggs, chicken, dairy, fuel) than ever before, the supplies we bid on are now being bid on and consumed by other nations.

This increased demand globally will affect the food prices locally.

Suggested Reading:

Food Price Crisis Triggers Questions about Global Food Security

Prepare for a food crunch

Dani Rodrik’s weblog

World Wide Food Price Crisis

Biomass Energy To Drive Up Food Prices In Next 10 Years

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