Rising Food Prices Essay

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Rising Food Prices
Introduction:
Food prices have been on the rise and have become a global issue. Prices have soared over the past year and a half and threaten to go up further if issues are not addressed immediately. Below is a look at how prices have been over the past year. Figure 1. FAO Food Price Index: February 2007 - January 2008
Source FAO, 2008
In this project, we attempt to find out the causes for this price rise, the trends of the rise and the effects that this rise has had on us.
Causes:
1. High demand for food in developing countries:
The growing world population is demanding more and different kinds of food. Rapid economic growth in many developing countries has pushed up consumers' purchasing power, generated
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Drought has already led to significant changes in Australia's agricultural trends. Some farmers are abandoning rice, which requires large amounts of water, to plant less water-intensive crops like wheat or, especially in southeastern Australia, wine grapes. Other rice farmers have sold their fields or their water rights, usually to grape growers.
Scientists and economists worry that the reallocation of scarce water resources — away from rice and other grains and toward more lucrative crops and livestock — threatens poor countries that import rice as a dietary staple. As we see in this data, since grape production gives the farmers more profit they are turning to grape production instead of rice. Things like this are causing rice prices to go up tremendously.
Even with the recent doubling of rice prices, to around $1,000 a metric ton for the high grades produced by Australia, it is even more profitable to grow wine grapes.
3. Rise in oil prices and effect on food prices
Oil prices have risen exponentially in the last few years and this has had a tremendous effect on the food prices. Oil prices have increased by more than 4 times in the last 6 years. This means that it costs four-times as much to plant, irrigate, harvest and transport as it was six years ago. 4. Policy effects
Many countries are taking steps to try to minimize the

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