Why are food prices rising?

Excerpts from various FT articles

Food prices have been rising steadily in the past few months and the effects are being felt globally. As agricultural commodities such as wheat and dairy trade at record highs, some governments, such as Russia, are implementing price controls on selected types of bread, cheese, milk, eggs and vegetable oil.

Rice prices have surged to a 20-year high in the latest sign of global food inflation, creating policy headaches in Asia, where more than 2.5bn people depend on cheap and abundant supplies of the grain. Asia has not known famines since the 1970s, and recent price rises for rice and other basic foodstuffs have sparked unrest.

Indeed, there is already ample evidence that political tensions are building: the World Food Programme, for example, now thinks a third of the world’s population lives in countries with food price controls or export bans.

There are now widespread predictions that there could be further price increases soon, because of growing demand for key resources. Scarcity of water and arable land means that the boom in food prices could last longer than most expect, a new study has warned. But why is food getting more expensive?

Here are the main factors I summarise from various articles: tight supplies and rising demand in emerging markets, urbanisation, changing diets in emerging market, subsidies and market distortion, the impact of climate change, rising input price, capital and resource misallocation. Click on the title link for interactive multimedia.

More related topics: http://www.ft.com/foodprices

Twenty-year high in rice prices sparks fears:

http://www.ft.com/cms/s/0/f40ad5ca-e975-11dc-8365-0000779fd2ac,dwp_uuid=a955630e-3603-11dc-ad42-0000779fd2ac.html

The next crisis will be over food: http://www.ft.com/cms/s/5a9b3c72-db2e-11dc-9fdd-0000779fd2ac,dwp_uuid=a955630e-3603-11dc-ad42-0000779fd2ac.html