Global Food Crisis - Food versus Fuels

EXECUTIVE SUMMARY Between mid-2007 and 2008, the issue of rising global food prices moved to the forefront of the international political agenda. As a result of higher food prices, tens of millions of people were pushed into hunger and poverty around the world. Civil unrest flared up around the world and many countries introduced export restrictions on food subsidies and price controls. In this paper, we analyze the immediate causes of food prices; in particular the role of biofuel will be examined in detail. What action policy makers need to take now to ensure global food security in the future will be assessed. Keywords: Food Prices, biofuels, ethanol INTRODUCTION: FOOD INFLATION In this paper, I will examine the roots of increases in food prices, particularly the underlying global factors, and will investigate to see what governments around the world have done to tackle the issue and what we can do to economize on food demands. Obesity in advanced nation and malnutrition and poverty in developing countries have long been with us, but the global food crisis has been grabbing headlines recently. The food crisis has been serious enough that the United Nation (UN) Human Rights Council adopted a resolution on 22, May 2008 and had a special session on the food crisis from a human rights perspective. Many experts have looked at the issue and explored the role of biofuel production to see how likely it is that in the future it will undermine or weaken access to food for vulnerable people and whether there are any overriding ethical concerns that can justify biofuel production even if it harms access to necessary and sufficient food to avoid world hunger. According to UN Article 11, 1966, (Covenant on Economic, Social and Cultural Right), "everyone has the right to adequate food and the fundamental right to be free from hunger" (Eide, 2008). After 30 years of this covenant, the heads of State and Government gathered in 1996 at the World Food Summit (WFS) to reaffirm such rights. In 1996, at the time of the summit, the number of undernourished people in developing countries was estimated to be 823 million people (Eide, 2008). If the commitments made in 1996 had been followed through, the number of undernourished people in developing countries should have been reduced by approximately 20 million each year and by 2008 there should consequently have been some 583 million hungry people in the world. The tragic fact is that the number of undernourished people in the world today is over 900 million (FAO, 2008). In other words, there are many more undernourished today than in 1996. This is a devastating failure of the U.N 1996 summit resolution, and the major contributing factor has been the following: lower purchasing power of people and higher inflation that has left them unable to have access to food. In particular, during the last two years we have witnessed a noticeable increase in food prices, further lowering accessibility due to costs. By the end of the 1990s, food prices had plummeted to historic lows. But after the turn of the millennium, prices began to increase, up 75 percent since 2000 (see Figure 1) (World Bank, DECPG, 2009). In particular, since 2006 food prices have escalated dramatically, raising fears of a global food crisis. The price hike has affected virtually all major commodities (Figure 2). The International Monetary Fund (IMF) estimated in April 2008 that food prices represented 44 percent of global inflation in 2007 (Evans, 2009)) and as much as 67.5 percent in Asia. Prices of dairy and many cereals more than doubled in 2007, reaching all-time record highs causing middle-income households to cut spending in other areas, such as education and health. Therefore, food price inflation can be seen as an indirect and major contributor to poor health and inadequate education due to the necessary (and unwilling) diversion of discretionary funds by many households from education and health to basic food and survival. …