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November 17, 2010

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putrarya

Yes correct but you neglects externalities. Monoculture for example damaging environtment eventhough increasing price is on. Flooding is another example. This is because rising commodity price followed by fallacy of composition from herd insting.

Uriah Zebadiah

You have to go deeper than this to get a sense of what's going on. Food prices are higher, yes. But that doesn't mean farmers' profits are higher. Increased costs of diesel fuel, fertilizer, pesticides, herbicides, seeds, transportation, increased volatility from flooding, drought, monetary instability, and decreased yields from soil degradation are all contributing to put the hurt on farmers around the world, and will continue to do so for the foreseeable future. Frankly, farmers (and small farmers in particular) lack the market position to increase their profit margin, despite increased revenues, as they face enormous pricing pressure from large distributors.

While the abnormally low food prices we enjoyed for most of the past 20 years are responsible for a lot of farmers going under through being simultaneously outcompeted by modern industrial agriculture and lacking access to the capital necessary to effectively compete, the inherently unsustainable nature of these practices is slowly coming home to roost. As the price of oil rises (dictated by increasing costs of extraction and growing demand from China), we will see food costs continue to increase. Very soon, local organic produce grown via soil-enriching labor-intensive permaculture farming techniques will achieve price parity. Grain will prove more problematic, as global demand for both meat and biofuels continues to grow, and the cost of inputs rises accordingly.

Rahul

Well you are right to point this out.

Just as we have expense basket we also have income basket. Agriculture appears in income basket of low-income HH.

Beyond the cost-sales price differential, most of price rise is effected at middleman levels (know for sure about India). The reason is typically inadequate market infrastructure for farm goods.

Thus in countries where agri-product markets are well evolved, higher food prices tend to seep to the low income HH whereas in other areas they don't. (Some logical assumptions included).

Ezequiel

I think that it is important to see what economist at this International Organizations (i.e. World Bank, IMF, etc) are writing rather than expression of their leaders. And if one look at the papers you would see that this effect is included in the assesment. The results for most countries are still that poverty increased as a consequence of the rising food prices.

Some Selected Papers

The Effect of Rising Food Prices on Poverty in Honduras, mimeo. World Bank

Ivanic, M. and W. Martin (2008) “Implications of higher global food prices for
poverty in low income countries”, World Bank Policy Research Working Paper No
4594, Washington DC.

Demobynes G., E. Rubiano and C. Sobrado
(2008). “The Effect of Rising Food Prices on Poverty in Honduras”, World Bank, Washington DC.


Robles M., J. Cuesta, S. Duryea, T. Enamorado, A. Gonzales and V. Rodríguez
(2008). “Rising Food Prices and Poverty in Latin America: The Effects of the 2006-
2008 Price Surge”, Inter-American Development Bank, Washington DC.

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Depend of the country, prices of food must be made after the minimum salary in that country so all people will have access at them

Kalpa

Good observation. I note this pessimism and scare-mongering to be the norm in nearly all aspects of global food security reporting, something that readers epinephrine levels respond to. I'm afraid that it has led to making me a perennial ag contrarian.

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It depends on whether the poor are selling or buying.

Bi Sadong

Of course bad if the poor is buying.

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It's in the question itself. Of course, people can't afford if the price is too high for the minimum food they eat.

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Absolutely bad, people who are poor cannot afford for this food which are too high in price for their daily needs.

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It's in the question itself. Of course, people can't afford if the price is too high for the minimum food they eat.

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