The current price surge in crops reflects a shortfall in supply to meet demand, which forces consumers to bid against one another to secure their supplies. Soaring farm profits and land values support this explanation. What explains this imbalance, asks Timothy Searchinger, a research scholar at Princeton University.
Crop production has not slowed: total world grain production last year was the third highest in history. Indeed, it has grown since 2004 at rates that, on average, exceed the long-term trend since 1980 and roughly match the trends of the past decade. The problem is therefore one of rapidly rising demand.
Conventional wisdom points to Asia as the source, but that’s not so. China has contributed somewhat to tighter markets in recent years by importing more soybeans and cutting back on grain exports to build up its stocks. But consumption in China and India is rising no faster than it has in previous decades. In general, Asia’s higher incomes have not triggered the surge in demand for food. That starring role belongs to biofuels.
Governments can stop the recurring pattern of food crises by backing off their demands for ever more biofuels, says Searchinger.
Source: Timothy Searchinger, A Quick Fix to the Food Crisis, Scientific American, June 16, 2011.
For text: http://www.scientificamerican.com/article.cfm?id=a-quick-fix-to-the-food-crisis
For more on Environment Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=31
First published by the National Center for Policy Analysis, United States
FMF Policy Bulletin/ 05 July 2011
