uring the past two decades, population growth, improvement in incomes and diversification of diets have steadily increased the demand for food. Prior to 2000, food prices were in decline, largely through record harvests. At the same time, however, public and private investment in agriculture, especially in the production of staple food, decreased, which led to stagnant or declining crop yields in most developing countries.1 Rapid urbanization has led to the conversion of farmland to non-agricultural uses, and low food prices have encouraged farmers to shift to alternative food and non-food crops. Long-term unstable land use has also caused land degradation, soil erosion, nutrient depletion, water scarcity and disruption of biological cycles. Food prices began to rise in 2004 and production increased but more slowly than demand.2 The past few years saw a steep rise. In 2005, extreme weather events in major food-producing countries caused world cereal production to fall by 2.1 per cent in 2006.3 In 2007, rapid increases in oil prices not only increased fertilizer and food production costs but also provided a climate favourable to expansion of coarse grains and oil crops for biofuels. Many countries began to impose export restrictions on commodities to control prices; others purchased grains at any price to maintain domestic food supplies or considered taxes on imported food. This has led to panic and instability in international grain markets, attracted speculative investments and contributed to a surge in food prices.
While some food prices appear to be stabilizing, most are expected to remain high. Good harvests anticipated in key grain-producing countries and indications that some major producers will relax export restrictions have calmed grain markets. International prices have come down from their recent peaks. However, over the medium-to-long term, supply and demand dynamics, high fuel prices, global threats, such as climate change,4 water stress and scarcity, and degradation of natural resources are expected to keep food prices well above their 2004 levels.
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Source: United Nations