Economists from the International Monetary Fund (IMF) warn that “the world may need to get used to higher food prices” as a “structural shift in demand” contributes to higher prices for food and agricultural commodities.
The IMF acknowledges some temporary factors, such as the weather, have impacted prices. “Nevertheless,” the agency says, “the main reasons for rising demand for food reflect structural changes in the global economy that will not be reversed.” It may take years of additional supply growth to catch up with roaring demand.
The changing diet of citizens of emerging economies – particularly in Asia – is the most important factor contributing to rising food prices. The dietary shift towards meat and other livestock products, has resulted in greater demand for grain as a source of livestock feed.
The recent turmoil in the Middle East and resultant rise in oil prices does not bode well for global food prices. The FAO says rising oil prices could “further exacerbate an already precarious situation in food markets” because fuel plays an important role in the entire agricultural production cycle. Read more here…