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Food price index rose 5X faster than global per capita GDP since 2000: The real factor that caused t

04/30/2012 @ 12:58pm


            It is never easy to approach this subject.  When one wants to point out a problem with global food sustainability prospects, the automatic reply comes in the form of accusations of one holding Malthusian and alarmist views, which have been proven wrong, and will always be wrong.  Presentation of counterfactual evidence is no longer necessary when one has such an impressively effective tool to suppress an argument.  The need for suppression of this issue is found in many social quarters.  Economic interests are in expansion, and that includes the expansion of the consumer base.  Population growth is therefore seen as important.  Religious groups are interested in suppressing this issue, because the idea of promoting Planned Parenthood contrasts with the teachings these establishments inherited from an era which is no longer recognizable to us in terms of lifestyle and circumstances.  Finally, we have our political elites, who simply hope they can continue to stick their heads in the sand and ignore this increasingly hard to ignore problem.  There are no easy answers to this problem; there are no quick fix and therefore politically convenient solutions.  So we lack the mechanism to organize a human response to this already evident and coming humanitarian catastrophe.

A widening gap between food price and economic growth:

            According to the UN’s food and agriculture organization, between 2000 and 2012, the price of food has gone up by 150%, as measured by their global food price index.  This long term structural rise in food prices is unprecedented in history.  There was never a global rise in food prices that we know of in our past.  All previous price spikes were regional, triggered by temporary disruptions in agriculture.  Real global GDP growth during this same period has been a relatively more moderate 50% gain.  On a per capita basis, real GDP growth was about 35% for this period, because we had an increase in the world’s population of about 16%.  In contrast, before the year 2000, in most decades, per capita GDP growth tended to outpace the rise in food prices.


It is tempting to sweep this problem under the carpet.  We could blame this problem on speculators and excessive money printing by central banks.  The benefit of doing so is peace of mind.  The cost is failure to tackle the problem.

The real reasons for this increase in the price of food are as follows:

-An increase in the price of inputs, such as oil, which also rose in price by about 500% over this twelve year period.  Other inputs such as potash also rose in price.

-Farmland is becoming more scarce, due to factors such as degradation due to misuse, loss of water supply for irrigation, changing weather patterns (climate change), and encroachment by other uses for the land, such as building residential neighborhoods, use of land by other industries such as mining, or oil and gas extraction, as well as building infrastructure such as rail lines and highways.

-We also have food contamination, and pollution that can cause a drop in food yields.  Such is the case with wild fisheries, which are impacted by contamination, as is the case at Fukushima and in the Gulf of Mexico.  Pollution in the form of agricultural runoff is causing dead zones in oceans.  Overfishing is also causing fisheries to collapse.

-The rate of increase in cereal yields per unit of land has declined in recent decades from 2.5% per year to about 1.5% per year.  So, not only do we have less farmland available, but yields are not advancing as fast as they used to, for reasons such as land degradation, unstable weather patterns, as well as an approach to the limit of what yield enhancing techniques can do for us, such as the use of irrigation, hormones, GM seeds, and the application of fertilizers and pesticides.

-Aside from supply side issues, we have demand side issues to contend with.  The already mentioned increase in the price of oil caused the popularity of bio-fuels to rise, which means that we are now shifting our food supply from feeding people to feeding our transport system.  Effectively, we are pitting gas tanks against people’s stomachs.

-On the demand side, we also have a continuing rise in the world’s population, as well as a rise in the world’s middle class ranks, who demand more animal protein that takes far more land and resources per caloric unit produced than cereals do.

-If speculators are indeed a cause of the rise in food prices, I would put them right where I just did; at the bottom of the list.

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