As Food Prices Hover at Historic Highs, Extreme Weather and Asian Demand are Poised to Boost Prices Even Higher
After peaking in February, food prices have stayed at historic highs. Food prices are climbing back to historic levels, the UN Food and Agriculture Organisation (FAO) reports. Prices increased by 1.3% in June due to worries over bad sugar harvests from “a spell of two months without rain.”
Food prices are poised to increase:
Goldman Sachs said it expected further increases in a wide range of commodity prices this year and into 2012 – in food, as well as energy and metals – on the back of strong demand from Asia.
However, Goldman is confident that now is a good time to get back into commodities. “We expect this [Asian] demand growth will be sufficient to tighten key commodity markets over the next six to 12 months, particularly for those markets where supply constraints will become binding even on slower economic growth,” said Jeffrey Currie, Goldman’s global head of commodities research.
In other words, expect more food shortages and high prices. This is good for investors, but bad for the world’s poorest people. The World Bank estimates that these record highs are pushing tens of millions more people into poverty:
In addition to poor people being less able to afford a good meal, more people are now poor because of higher food prices. Since last June, an additional 44 million people became extremely poor, living under US$1.25 a day. And we now calculate that a further 10% increase in global prices could drive an additional 10 million people to poverty, while a 30% food price hike could lead to 34 million more poor.
Food prices having been spiking in an upward trend since 2008. Around the world, crops are failing as extreme weather events like droughts and floods threaten farmers, many of whom are in the poorest countries
http://thinkprogress.org/romm/2011/07/08/264044/food-prices-extreme-weather-asian-demand/
These price run ups were a major factor driving the "Arab Spring." The Arab world went from about 70 million in 1950 to something over a third of a billion today. Much of the area they in habit is essentially desert. Most are poor, using over half of their total income to buy food. When the price of food doubles or more than doubles, they are completely priced out of that 'market.' Most that had been feeding their people on oil revenues are past peak, with ELM, nearing the point of zero net exports. How this doesn't become the mother of all clusterfs in the very near term is beyond me.
Meanwhile, a devastating two year drought in the horn of Africa is causing widespread famine now.
http://thinkprogress.org/romm/2011/07/05/260744/worst-food-crisis-of-the-21st-century-driven-by-worst-drought-in-60-years-in-east-africa-as-climate-change-makes-reduced-rainfall-a-chronic-problem/
Malthus, meet MENA and East Africa. (And much of South Asia does not seem far behind.)
