FOOD CRISES

For two decades, leading up to the millennium, global
demand for food increased steadily, along with growth
in the world’s population, record harvests, improvements
in incomes, and the diversification of diets. As a result,
food prices continued to decline through 2000.
But beginning in 2004, prices for most grains began to
rise. Although there was an increase in production, the
increase in demand was greater.
Food stocks became depleted. And then, in 2005, food
production was dramatically affected by extreme
weather incidents in major food-producing countries. By
2006, world cereal production had fallen by 2.1 percent.
In 2007, rapid increases in oil prices increased fertilizer
and other food production costs.
As international food prices reached unprecedented
levels, countries sought ways to insulate themselves
from potential food shortages and price shocks. Several
food-exporting countries imposed export restrictions.
Certain key importers began purchasing grains at any
price to maintain domestic supplies.
This resulted in panic and volatility in international grain
markets. It also attracted speculative investments in
grain futures and options markets. Perhaps as a result,
prices rose even higher.
Subsequently, food commodity prices appeared to be
stabilizing. But prices are expected to remain high over
the medium to long term with devastating consequences
for the world’s most vulnerable populations.