Urban development. Blog #2. What is causing the food bubble and what are the solutions?

The price of agricultural commodities has drastically increased in the past years creating a global food price bubble. “The ensuing crisis has resulted in a 50-200% increase in selected commodity prices, driven 110 million people into poverty and added 44 million more to the undernourished.” (UNEP,The Environmental Food Crisis) Adam Smith’s invisible hand theory cannot be applied to a basic need of life such as food, nor should it be applied to another vital asset: water. The idea that the food market will regulate itself is inaccurate and has proven so in the past years. Global food prices have been volatile from 1872 to present. Prices have skyrockets and are now higher then they were since 1984. It is predicted that they could be even worse with the droughts seen across the world devastating harvest (for example in China, Russia and Argentina). The biggest economic failure is that 925 million people are starving and living with hunger as of 2011. (growing a better future) World food demand depends chiefly on population and income, both of which multiply predictably and slowly however, this is not the sole reason for the massive spikes in the global food prices.

When droughts and floods hit countries assure their own supplies by banning exports regardless of the consequences of the importers. Importers then in turn panic and quickly restock grain reserves. This domino affect coupled with the weaker dollar “makes restocking cheaper in local currencies and dearer oil pushes up the cost of inputs,” (The Economist) Furthermore, the World Bank, specifically Bafis and Haniotis 2010 implement speculation: “the financialisation of commodities in the price surges and declines,” and poignantly states that the price variability has overwhelmed price trends for important commodities. There is a lot of mal practice in the trading and buying of food. Stern and strict laws but be implemented for fair trade.

Food production is predicted to rise 70% by 2050 to meet the demands of population growth. However, climate change, land diminishing at alarming rates and water supplies drying up how will developing countries’ megacities and the developed world meet the demand of the future 9 billion people. “Up to 25% of the world food production may become lost during this century as a result of climate change, water scarcity, invasive pests and land degradation.” (UNEP) We need to be investing in the farmers, encouraging education and technology to promote growth. I stand firmly on the belief that education is the key to development and the answer to all the world’s problems. As mentioned in class the Brazil’s Bolsa Familia program is a great incentive. A mother receives a small stipend on the condition that her children attend school and get a doctors check up. In order to boost farmer yield we need to get rid of trade barriers and subsidies. In America case they need to encourage organic farming, cut subsidies and forget biofuels that are environmentally destructive and competing with food supplies.
The demand for food and water will only continue to grow as population growth climbs rapidly. There is a long trend of falling inflation-adjusted agricultural prices will surely lead to the price bubble popping. As the impoverished rights are limited, the big industrial powers are manipulating the land and the market for profitable gain. Trade rules hinder poor countries to take advantage of trade opportunities. It is a sad day when we are willing to deprive people of food all in the interest in making money.

Work Cited
Most my information came from class and the class readings. I am always confused when things become facts in my head and how to cite them, for instance I know 925 million people are now starving which is cited in many articles.
The Environmental Food Crisis.” United Nations Environment Programme (UNEP) – Home Page. Web. 06 Feb. 2012. .

A Report on Emergency Food Distribution in the US in 2009. Rep. Chicago: Feeding America, 2009. Print.

“Crisis Prevention; The Future of Food.” The Economist (US) 26 Feb. 2011. Print.

· Oxfam (2011) Growing a better future: Food Justice in a Resource Constrained World. Available at

http://www.oxfam.org/sites/www.oxfam.org/files/growing-a-better-future-010611-en.pdf

· J. Von Braun (2008) ‘Food and Financial Crises: Implications for Agriculture and the Poor’, IFPRI Food
Policy Report. Washington DC: International Food Policy Research Institute. Available at

http://www.ifpri.org/publication/food-and-financial-crises

· FAO (2009): ‘How to Feed the World in 2050’. Available at

http://www.fao.org/fileadmin/templates/wsfs/docs/expert_paper/How_to_Feed_the_World_in_2050.

pdf

· Olivier De Schutter (2010): Food Commodities Speculation and Food Price Crises. Available at:

http://www.makefinancework.org/IMG/pdf/un_deschutter_2010_commodity_speculation.pdf

2 comentarios / 06 Feb 2012 por Lauren Musiello
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