Food prices have been increasing rapidly, roughly 3 times faster than gross product in the recent years, according to FAO/OECD monitoring specialists. After a slow decrease from 1990 (food price index 105.5) to 2003 (food price index 97.7), food prices inverted the trend and attained a spike in 2008 (food price index 164.5). In 2010 they went up again and reached record levels food price index 197.1).

Real food prices – inflation excluded – (blue line) have reached historical heights, alerts the Food and Agriculture Organization of the United Nations (FAO). Meanwhile, an anemic gross world product (red line) shows little progress and is left far behind by price increases. The latter have been increasing roughly 3 times faster than gross product in the recent ten-year period.

Already in 2008, the World Food Summit had shown concern with the fever bout that took food prices to unprecedented spikes and triggered violent food riots in several countries. After an adjustment in 2009, prices caught fire again in 2010 and attained absolute highest levels in January 2011. Probable causes abound:

Short term price volatility has increased considerably since the price spike of 2008. However, whatever the short-term price movements may be, average crop prices over the next ten years will stay above the levels of the decade prior to the 2008 peak, say FAO and OECD experts. Current price levels are not a blip in the curve but a genuine upwards trend.

The heaviest impact will remain on the poor, especially in developing countries, with the world’s hungry now estimated at over 1 billion people. High food prices, falling yields of food crops, increasing crowds of undernourished people, growing numbers of unemployed, a wheezing world gross product engine, and an unstoppable inequality of income distribution, all these ingredients make an explosive cocktail. The spike in prices during the year 2008 was widely held as the reason for a series of "food riots" that erupted throughout Africa. If the same causes produce the same effects, one can expect further social and political disturbances if the prices of agricultural goods increase further.

 

Real Food Price Index¹ – Gross World Product (GWP)

Year

Food Price Index
(2002-2004 = 100)

Gross World Product

Index
(2002-2004 = 100)

Trillion US$ PPP² (constant 2005 international $)

1990105.568.5235,868
1991101.669.4336,342
1992102.570.5936,949
199398.171.8337,599
1994100.174.0738,770
1995105.376.4540,018
1996116.179.2841,497
1997114.582.4243,144
1998107.684.4644,211
199993.187.5145,805
200092.991.6147,954
200199.093.6449,016
200296.696.1350,317
200397.799.4852,072
2004105.1104.3954,642
2005109.7109.0757,092
2006116.5114.6460,008
2007139.4120.663,128
2008164.5123.9464,872
2009134.9123.1264,448
2010158.1  
2011197.1  
¹ Consists of the average of 5 commodity group price indices, inflation excluded, weighted with the average export shares of each of the groups for 2002-2004.
² PPP GWP is gross world product converted to international dollars using purchasing power parity rates. An international dollar has the same purchasing power over GWP as the U.S. dollar has in the United States.

 

Sources: see FaoStat-FAO for food prices, and World DataBank–The World Bank for gross world product data.

 

areppim logo  areppim: information, pure and simple