Rising Food Prices Series: Part II

Posted by Patrick O'Connor on 5/15/08 2:26 pm

This article is the second part of a multi-part series about rising global food prices. In this installment, we will explain one of the factors that is contributing to a rise in global food prices: Changing demand from developing countries such as China and India. In the following weeks, we will discuss other factors.

Rising and changing demand from developing countries contributes to global food crisis

As noted in Part I of this series, a sharp rise in food prices has developed into a global crisis, according to the United Nations. The prices of many food staples, such as wheat, have approximately doubled over the past year. The reason: Demand is outpacing supply, in part because of changing demographics in developing countries.

The Population Reference Bureau (PRB) says the next half century will see wild swings in population sizes, with most Western developed nations declining slightly in population and developing nations expanding rapidly. The organization says that “nearly 99% of all population increase takes place in poor countries.”

Perhaps nowhere is this likely to be most noticeable than in Asia. Today, China and India together comprise more than a third of the world’s population, and they are only expected to expand. According to the United Nations Population Division, India’s population will grow from 1.08 billion to 1.63 billion people in 2050, overtaking China, whose population will grow from 1.3 billion to 1.44 billion over the same time period. To put that in perspective, by 2016, the population of India is expected to be larger than the population of all the more developed countries combined—that is, all the countries of Europe (including Russia), as well Australia, Canada, Japan, New Zealand, and the United States.

Of course, all of those people are demanding more of the food staples they typically eat—cereal grains. In developed nations, cereal consumption is substantial, but in some developing nations, it constitutes practically the entire diet of poor people. Maize (or corn), rice and wheat together accounted for 87% of all grain production worldwide and 43% of all food calories in 2003, according to the Food and Agriculture Organization of the United Nations (FAOSTAT). Developing countries are certainly demanding more of these cereal grains as their populations increase.

But what people eat is also changing—because of improving economic prosperity. Until now, only a small fraction of the world has enjoyed the fruits of economic well-being, with high-income industrial countries accounting for less than a fifth of the world’s population, according to the Brookings Institution, a nonprofit public policy organization based in Washington, D.C. Since 1980, however, China and India have achieved remarkable rates of economic growth and poverty reduction. And when people have more money to spend, they typically spend it on foods they haven’t been able to afford in the past, such as animal proteins.

This is certainly true in Asia, where animal protein consumption continues to increase. For example, annual meat consumption in China began increasing as early as 1983, when it was 16 kilograms per person, according to the World Resources Institute. From 1995 through 2008, annual meat consumption in China increased from 30.075 million tons (25 kilograms per person) to 70.013 million tons (53 kilograms per person).

This, of course, is driving up the price of meat, but it is also driving up the price of grains. Eating meat is not the most efficient way to consume food, because farmers have to grow grain crops to feed the animals first. It takes 7.5 to 8 ounces of grain to produce a pound of beef, and 5 to 7 ounces of grain to produce a pound of pork. According to the World Resources Institute, in 1995, 150.375 million tons of grainwere needed to support China’s meat consumption; today, 350.065 million tons are needed. So, a 39.938 million ton increase in meat consumption resulted in a 199.69 million ton increase in grain consumption.

Just how much developing countries such as China and India are contributing to the global food crisis is debatable, since there are many other factors to consider. Another possible culprit in the global food crisis, the biofuels industry, is certainly pointing the finger. “Those who see biofuels as the driving force behind recent food price increases have overlooked not just one elephant standing right in front of them, but two,” said European Union Commissioner for Agriculture and Rural Development Mariann Fischer Boel in a speech at the European Policy Centre, a think-tank in Brussels. But is the biofuels industry simply trying to divert attention from its own role in the global food crisis? In Part III of this series, we’ll examine that issue in more detail.

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Posted by dkm999 on 5/17/08 10:14 am

In the September 2007 issue of Scientific American, another problem related to increasing consumption of animal proteins was outlined: it has been pretty well demonstrated that this diet change is related to an increase in health care costs for countries that undergo such a shift.  The health problems that arise will not appear for several years, but are related to excess fat that accumulates because of the increased caloric intake and because, as affluence increases, exercise decreases.  So we may see economic shifts 10 years later, as developing countries divert part of their public spending to health care costs.

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