The Price of Rice

The price of rice has gone up here from $13 for a
ten-kilo sack to around $18. This is the beginning
of an article from the World Bank's website - I'll
provide a link but I'm not sure it will work, I think
it's an internal website. Climate change isn't
mentioned by name, but I think it can be inferred -
(conflict, floods and extreme weather - the causes
of which are ~ ?)


High Food Prices—A Harsh New Reality

Rising food prices are affecting poor people, who often spend more than half their incomes on foodMarch 3, 2008––In Mexico City, mass protests about the cost of tortillas. In West Bengal, disputes over food-rationing. In Senegal, Mauritania, and other parts of Africa, riots over grain prices. And in Yemen, children march in public to call attention to child hunger.
This chain of events is in stark contrast to the falling food prices that consumers have come to expect over the past several decades.
On February 13, the FAO announced that 36 countries are in crisis as a result of higher food prices and will require external assistance. In many of these countries, food insecurity has been worsened by conflict, floods, or extreme weather.
Last month, in Davos and in Addis Ababa, Bob Zoellick called for action to tackle hunger and malnutrition in a world of rising food prices. "Hunger and malnutrition are the forgotten Millennium Development Goal. It has gotten less attention, but increased food prices and their threat—not only to people but also to political stability—have made it a matter of urgency to draw the attention it needs,” he said. (See FAO’s World Food Situation site.)

The Factors at Work
While headline news about high food prices is a relatively recent phenomenon, the broader upswing in commodity prices began in 2001. Large structural shifts in the global economy—including growing demand in China and India—have been steadily reflected in commodity price increases, especially of metals and energy.

Food prices have increased in response to many factors: higher energy and fertilizer prices; increased demand for biofuels, especially in the US and the European Union; and droughts in Australia and other countries. World grain stocks are at record lows, and next year’s prices depend on the success of the next harvest in the northern hemisphere.
Wheat prices in US dollars have increased by 200 percent, and overall food prices have risen by 75 percent since the turn of the century. Adjusting for exchange rates and domestic inflation reduces the price increases faced by developing countries—but these increases are still severe for millions of poor consumers.
“The increases in grain prices are not caused by short-term supply disruptions, as is the normal case, and it will likely take several years for supplies to increase, to rebuild stocks and allow prices to fall,” said Don Mitchell, lead economist in the Development Prospects Group.

If You Live on Less Than $1 a Day
Imagine a low-income family, say in Bangladesh, that might pay 20 cents for a kilogram of rice one year and 30 cents the next. For poor people, who often spend more than half their incomes on food, unrelenting increases in the price of staples can be devastating.
Yemen, which imports about 2 million metric tons of wheat a year, illustrates how rising food prices can increase poverty. After a year of record inflation, doubled wheat and wheat product prices might increase national poverty by 6 percentage points.
“If no action is taken, this could fully reverse the gains in poverty reduction that we’ve seen in the country between 1998 and 2005,” said Thirumalai Srinivasan, country economist, Yemen.
While the urban poor are most affected, it is worth remembering that most rural people are buyers rather than sellers of food. There could well be severe effects for landless rural workers whose subsistence wages may not increase in line with food prices.

No Relief in Sight
The root causes of the phenomenon of rising food costs—high energy and fertilizer prices, the demand for food crops in biofuel production, and low food stocks—are likely to prevail in the medium term.
Energy and fertilizer prices are projected to stay high. Already, fertilizer prices have increased 150 percent in the past five years. This is very significant, because the cost of fertilizer is 25 to 30 percent of the overall cost of grain production in the US—which supplies 40 percent of world grain exports.
The demand for biofuels will also probably rise. A quarter of the US maize crop—11 percent of the global crop—went into biofuel production this year, and the US supplies more than 60 percent of world maize exports. Notably, the US—one of more than 20 countries to require biofuels use—has just doubled its biofuels mandate for 2015.
“The biofuels surge makes things worse by adding high demand on top of already high prices and low stocks,” said Mitchell. “Ethanol and biodiesel produced in the US and EU don’t appear to be delivering on ’green’ promises either, making them very controversial,” he added.