While food prices generally declined in the past decades, for 2008; World Bank, 2008): 1) The combination of extreme
some commodities, they have increased several fold since weather and subsequent decline in yields and cereal stocks; 2)
2004, with the major surges in 2006–2008 (Brahmbhatt and A rapidly increasing share of non-food crops, primarily biofu-
Christiaensen, 2008; FAO, 2008; World Bank, 2008). The els; 3) High oil prices, affecting fertilizer use, food production,
FAO index of food prices rose by 9% in 2006, 23% in 2007 distribution and transport, and subsequently food prices (Fig-
and surged by 54% in 2008 (FAO 2008). Crude oil prices, af- ure 3); and 4) Speculation in the food markets.
fecting the use of fertilizer, transportation and price of com-
modities (Figures 1 and 2), peaked at US$147/barrel in July Although production has generally increased, the rising prices
2008, declining thereafter to US$43 in December 2008 (World coincided with extreme weather events in several major cereal
Bank, 2008). In May 2008, prices of key cereals, such as Thai producing countries, which resulted in a depletion of cereal
medium grade rice, peaked at US$1,100 /tonne, nearly three- stocks. The 2008 world cereal stocks are forecast to fall to their
fold those of the previous decade. Although they then declined lowest levels in 30 years time, to 18.7% of utilization or only 66
to US$730/tonne in September (FAO, 2008), they remained days of food (FAO, 2008).
near double the level of 2007 (FAO, 2008). Projections are
that prices will remain high at least through 2015. The cur- Public and private investment in agriculture (especially in sta-
rent and continuing food crisis may lead to increased inflation ple food production) in developing countries has been declin-
by 5–10% (26–32% in some countries including Vietnam and ing relatively (e.g., external assistance to agriculture dropped
the Kyrgyz Republic) and reduced GDP by 0.5–1.0% in some from 20% of Official Development Assistance in the early
developing countries. 1980s to 3% by 2007) (IAASTD, 2008; World Bank, 2008).
As a result, crop yield growth became stagnant or declined in
Among the diverse primary causes of the rise in food prices are most developing countries. The rapid increase in prices and
four major ones (Braun, 2007; Brahmbhatt and Christiaensen, declining stocks led several food-exporting countries to im-
FAO Commodity Price Indices
300 300
Dairy
250 250
Oils and
Cereals
Fats
200 200
Sugar
150 150
Meat
100
Index reference: 1998-2000
100
2000 2002 2004 2006 2007 2008
J F M A M J J A S O N D J F M A M J J A S O N D
Figure 2: FAO food commodity price indices 2000-200. (Source: FAO, 2008).
2
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