Global Food Crisis

EF4334 Group Paper Assignment 1

Global Food Crisis

ZHU Kangbai 51839837

TING Chiu Chuan 51765924

GENG Yining 51799337

Myo Kyaw Thu 52490670

MAEDA Keijiro 51923341

1. Overview of Global Food Crisis in 2008

The food price increased sharply during 2007 and 2008, resulting in a global food crisis that impacted worldwide political, economic and social stability.

The World Bank reports that global food prices rose 83% from 2005 to 2008 and the FAO cites a 45% increase in their world food price index from December 2007 to August 2008(Figure 1). The Economist's comparable index stands at its highest point since it was originally formulated in 1848. As of March 2008, average world wheat prices were 130% above their level a year earlier, soy prices were 87% higher, rice had climbed 74% and maize was up 31%(Figure 2).[1]

Figure 1

Figure 2

This caused serious social unrest in some undeveloped regions where protests and food riots resulted in serious casualty. Governments and international organizations provided a couple of financial aids and some food price measures in effect seemed to have retarded the drastic price increase. [2]

The causes of this worldwide soaring food price are still under debate. Reduced food production due to unseasonable droughts in 2006, and heightened cost of fertilizer and food transport caused by rising oil price are considered to be the initial cause. [3] Falling stockpiles, and the use of biofuel and increased demand of food in overpopulated countries have also contributed to the soaring food price. Other factors such as speculation in financial markets are also held responsible to some extent. The factors above, speculation activities in particular, will be discussed in the later parts of the paper.

2. Impacts of soaring food price

Price volatility on food brings different impacts on the global population. Three main impacts include social impact, economics impact and political impact.

2.1 Social impact

The groups that were mostly affected by the increasing food prices were casual laborers in both rural and urban areas. When the food prices increase, people have to use more cashes or use credit to buy food. [4]Although there