Causes of increasing alimentation prices Free Essays

The divertive utilization of rice alignments to biofuels production is considered a result of the soaring food prices of our recent age. The resultant utilization of alimentations, more so rice hulls in many countries is highly preferred for use in biofuels production. Bio-extraction of ethanol from plants is considered as environmentally friendly as some analysts say it contributes to curbing the issue of global warming by reducing the concentrations of green house gases in the atmosphere. We will write a custom essay sample on Causes of increasing alimentation prices or any similar topic only for you Order Now Because the waste product of rice becomes commercialized, it makes rice of any type or species to be valuable and consequently makes its price increase. (Saha et al, 2004) Unfair trade agreements imposed by rich nations that try to undermine poor nations making them unable to determine their policies of food production have also contributed to a higher localized supply in rice. A good example can be cited by Shah (2008) where she reveals that the Doha World Trade Organization meeting intended to ascertain poor nations’ profitability in global trade did not materialize due to the developed nations view that the undeveloped nations would not ensure the end part of their bargain in the talks. The technology of genetic modification has also fuelled the high prices in foods in comparison of organic foods and genetically modified ones due to the cheap prices of the later in terms of competition. However, research by environmentalists has shown that the genetically modified (GM) foods have negative attributes to the ecological set up and consequently the human health system. The prevalence of the GM foods in the developed nations has seen demand of the higher priced organic foods increase in time due to the health effects associated with the former. The increasing population has seen the demand of food increase causing its consequential higher production. Rice being a staple meal in Asia has seen its exports being restricted to ensure that people specifically in the Asian nations of India and Chain can sustain their people with enough food. China with a population of about 1. 3 billion people is the highest populated nation in the world followed by India. The government’s priority to feed the people comes first and thus has seen the exportation control of agricultural produce to other nations causing a shortage of food in the global market which by laws of economics dictates increase in commodity prices when supply is low. The exorbitant costs of inorganic fertilizer and other farm inputs for agricultural practices have also contributed to the increasing food prices. This is because the costs of production are also reflected in the end price of the agricultural produce, therefore if the price of one input increases, it will inevitable cause a rise in the end product as the farmer can not take up that cost for the benefit of the consumers since it will be tantamount to losses in business. In the UK, farmers are facing a 15% hike in fertilizer prices that is hurting the agricultural sector. This surge in prices is cited to have arisen from anti dumping taxes on nitrogenous fertilizers in the UK from some nations since 2000 that has seen a monopoly in the supply of fertilizer. (Walker, 2007) From the beginning of 2003 when the Iranian invasion began, oil prices have been going up exponentially that indirectly instituted high price of food. This was and is being attributed to low production levels of crude oil, thus diminishing supply due to the increasing preference of biofuels. The link between the soaring food prices and the high energy prices is that food needs to be transported to one part of land to another more specifically in relation to our globalized world that increases distances of destination. The modes of transportation used are mostly powered by by-products of fossil fuels that are expensive as could be seen by the highest recorded price of over a hundred dollars per barrel at the beginning of 2008. (Shenk 2008) As a consequence, the cost of energy is passed down to the end user making the commodity price higher than usual. This is a global problem since the crude oil prices are the same all over because of their sole control by the Oil Producing and Exporting Countries (OPEC) arrangements. The new problem of climate change is also predicted to cause further increases in food prices. The variations in climate across nations that solely depend of agriculture for their growth is expected to fall drastically as unpredictable weather patterns take charge causing situations of extreme drought and floods in different places. These alterations in climate will reduce agricultural productivity and food shortage will become imminent across the affected nations. It is now being observed that Australia, one of the largest wheat producing countries is in its third year of drought. Its respect as the world producer of wheat is now in jeopardy as its silos are becoming empty will the wheat prices are increasing. (Stancich, 2009) The problem of attacks from crop pests and weeds is also associated in the ever increasing food prices. In Central as well as the Southern parts of the Vietnam nation, according to a recent study Zeigler (2009), rice crops have been attacked by the tungro crop virus originating from the brown plant hopper insect. And furthermore, its spread is being predicted into China together with Thailand and Columbia. Pricing of rice is obviously expected to increase as the supply would have been greatly diminished while demand keeps growing. The continuing undervaluation of the US dollar which is used as a bench mark for trading in many nations is also attributed to the increasing food prices. Globalized nations are feeling the pinch of the current economic crisis of the US and business has gone down meaning that many sectors of the economy are being hurt more specifically in the agricultural sector. Farmers in the developed nations have cope better with the high prices of this global recession compared to their counterparts in the developing nations where production has reduced. A low supply with a high demand implies that food prices would increase in the developing nations unlike in developed nations where it would remain relatively stable. In India -one of the major rice producers- the effect of the global financial crunch in many sectors of the economy such as the agricultural industry has seen its 2008 GDP drop to 7% while further reduction is expected for 2009 at 5%. (World Bank Group, 2009: 2) Sporadic economic growth in different nations all over the world has been identified as a contributor to the increase in commodity prices. As the economy of a nation increases so as the living standards of the citizens. This makes purchasing power go a notch higher due to demand for better goods and services. This causes incompatibilities between demand and supply arising that sees the increase in prices. This is exhibited in the case with China that has been marked by speedy economic development that has exacerbated this global crisis that is catalyzed by its enormous population. (Zu H. Khan, 1997) Effects of alimentation price increases As an effect, the high food prices could be succeeded by civil unrest especially among the poor nations which can be exemplified by the riots emanating from exorbitantly high food prices in Burkina Faso as well as Cameroon where its was compounded by the expensive fuel costs. The country of Indonesia has also been characterized by such frustrations when there was recent scarcity in Soya beans. Rise in inflation is a notable effect of increased food prices more especially in developing nations. Most developing nations operate on deficits and a down turn from increased food prices puts strains on the government’s functionality due to limited financial resources. This sees the issue of relief coming in from developed nations to help the affected. Increase in poverty becomes evident due to high food prices as people reduce their consumption so as to sustain themselves in future days. On an optimistic view, the soaring food prices have also the effect of causing governments to intervene by pushing for increased production of food in their countries to cushion the poor from hunger. (FAO, 2009) Conclusion Though there has been tremendous growth in food production all over the world, the predictions of the future are still pessimistic as demand continues growing high. This is in reference to the stagnated supply that can not reach equilibrium with the demand; hence the future is determined by new sources of supply to cope with the vacuum in supply that would ensure price stability. Therefore, foreign alimentations such as bananas, mangoes, pineapples, and exotic fish among others will not fetch the same price as today due to these imbalances in supply and demand. To mitigate this, an in depth intervention through social protection for the short and long period requirements in conjunction with initiatives on alimentations for the poor should be implemented. Research into new agricultural opportunities should be intensified so as to achieve equilibrium in supply and demand of alimentations. This will go far in guarantying steady prices of food in the global market. And resultantly, agricultural trade regulations that burr efficient production in the developing nations should be renegotiated with rich nations that discourage them so that a healthy and productive world can be achieved. (OECD, 2007) References: FAO, (2009). Bumper rice harvest could bring down consumer prices. Planete Urgence. Retrieved on April 20th 2009. From http://www. infosdelaplanete. org/5123/bumper-rice-harvest-could-bring-down-consumer-prices. html? L=EN Hu Z. Mohsin S. Khan (1997). Why Is China Growing So Fast? ECONOMIC ISSUES NO. 8 International Monitoring Fund (IMF). Washington D. C. Yan Z. (2008). China seeks a balance between food security and the urbanization. Retrieved on April 20th 2009. From http://www. china-embassy. org/eng/zt/t516240. htm Walker D. (2007). Fuel and Fertilizer Situation. John Wiley and Sons, Inc Stancich R. (2009). Climate change and food prices. Climatechangecorp. Retrieved on April 20th 2009. From http://www. climatechangecorp. com/content. asp? ContentID=5252 OECD (Organization for Economic Co-operation and Development) (2007). Agricultural Policies in OECD Countries: Monitoring and Evaluation. Paris: OECD. Saha, B. C. , Iten, L. B. , Cotta, M. A. , Wu, Y. (2004). Fuel ethanol production from rice hull [abstract]. American Chemical Society. Paper No. BI0T 101. Retrieved on 20th April 2009. From http://www. ars. usda. gov/research/publications/Publications. htm? seq_no_115=156041 Shenk M. (2008) . Oil Climbs Above $126 to Record as Dollar Weakens Against Euro. EU News, Havensworks. com http://www. havenworks. com/world/eu/ World Bank Group, (2009). Impact of Global Financial Crisis on South Asia. Retrieved on April 20th 2009. From http://74. 125. 47. 132/search? q=cache:y57oApfcEXgJ:siteresources. worldbank. org/SOUTHASIAEXT/Resources/223546-1171488994713/3455847-1232124140958/gfcsouthasiafeb172009. pdf+global+financial+crisis%2Bfood+pricescd=2hl=enct=clnk How to cite Causes of increasing alimentation prices, Papers