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Food Prices Crisis

World Food Prices Crisis: The Causes

Posted by staff writer

 

The world food prices crisis, which began in earnest in 2007 and 2008, sparked not only a dramatic increase in the percentage of people worldwide who go hungry each night, but a rapid spike in political and economic turmoil across the globe. Since 2005, food prices as a whole have risen close to 90 percent and the price of grain market prices such as wheat and rice have risen nearly 150 percent.

 

While there is no single cause for the world food price crisis, its origin can be linked to a few very definitive factors—factors which must be remedied if we are to bring an end to the crisis and regain economic and political stability. Here we will take a closer look at a few of those causes.

World Food Prices Crisis: Five Causes

While there are certainly more than five causes for the world food price crisis, the following factors seemed to be mentioned most frequently by economic and agricultural leaders in the field. In no particular order they are:

• Changing Diets. With increased income and urbanization around the world the diets in many poorer countries have changed dramatically and now include beef on a more regular basis. These changing diets have caused a spike in agricultural demand, as raising beef for human consumption requires significantly more grain.

• Drought and Adverse Weather Patterns. Key grain producing regions such as Australia and the Ukraine have recently experienced the worst droughts and adverse weather in their history, which reduces the amount of grain available and exacerbates competition. Global warming experts expect this trend to continue around the world, particularly in areas such as sub-Saharan Africa, reducing crop yields and thus driving up prices.

• High Energy Costs. Energy costs are on the rise again and this affects agriculture at every level of production and transportation. When fuel prices are elevated, it costs more to produce the same yield, thus driving up the price for consumers.

• Market Turmoil. Global market turmoil in other sectors of the economy has sent speculators and investors chasing high prices in the grain commodity markets. This also results in a higher base price for consumers.

 

• Fiat Currency Creation. In 1980, the Zimbabwe dollar was worth about $1.25 U.S. A loaf of bread could be purchased for under a dollar. Printing of fiat currency, which is nothing more than debasement of the money and leads to rising prices, skyrocketed under Robert Mugabe. By March of 2008, a loaf of bread cost $10 million Zimbabwe dollars. Less than one year later, a loaf of bread cost $25 billion Zimbabwe dollars. Clearly, the excessive creation of fiat currencies by the majority of western countries is contributing to the crisis of rising food prices around the globe. And with the gargantuan printing of the U.S. dollar under "quantitative easing" by the Bernanke Federal Reserve, it's only a matter of time before America's food crisis hits full force.

Although the world food price crisis saw its spike in 2008, experts warn that unless some of these five causes are addressed by the world at large, we could be looking at the most devastating food shortage and the highest world food prices in our history.
 

 

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