Why are food prices rising ?

The Economist's Food price index has increased 60% in the last year, mainly driven by increased prices for the world's 3 big cereal crops ... corn, wheat and rice. It would be easy to just blame it all on biofuels, but I think there are several more reasons:

* Increased energy prices... this makes the cost of running farm equipment & transporting the harvest much more expensive & also increases the cost of producing fertilizer. Natural gas is a key fertilizer input & this has had large price increases also ... which is linked to increased energy.

* Increased demand for food ... particularly from China and India. The diets of these countries is also changing towards more meat and dairy ... which are more expensive and require a lot more crops as feed, which drives up the price of corn & wheat.

* Increased drought (Australia & Southern Europe) in some areas has reduced crop harvests ... increased flooding in other areas has decreased harvests (UK). Climate change could be contributing to this.

* Increased demand for crops for biofuels ... although this is only one of many factors.

Peak Oil Lunatics

There is a serious argument about Peak Oil ... and then there is the not so serious one. Here is one of the latter ...

Apparently Peak Oil, caused the US Government to dream up the idea of 9-11 attacks. Al-Qaeda is a figment of George Bush's imagination. If you believe this video that is:

Oil, Smoke and Mirrors

What a joke ... its just another fairytale from peak oil doomsdayers. Amazingly, they have both English and German MP's on the video which support the idea of a 9-11 conspiracy.

They also suggest Peak Oil will be the end of the world as we know it. Yes, we're in for a tough time on the energy - but its not doomsday. Standard of living is not going to decrease dramatically, if at all. People who support "localization", which basically means, we all quit our jobs, throw away our cars and sit at home growing our own food are nutty. Its been tried before - Communist China promoted the idea of a noble peasant after the revolution there ... didn't work too well.

The Asian Miracle

Not directly energy related, but interesting anyway. China & India are talked of now as economic powers ... I just made an interesting comparison of GDP/person (which is basically income per person) for the last 50 years. I didn't quite understand the magnitude "Asian miracle" until I saw this. As recently as 1960, China and India were poorer per person than most of Sub-Saharan Africa.




China in 1980 had an income per person lower than Sudan ... pretty amazing, considering the influence it now wields in that country.

This gives me comfort that Africa is not a hopeless case and can escape poverty. Although the a similar miracle I don't think is possible. China and India's growth was caused by a shift to a market-based economy, which unlocked alot of potential which already existed.