The Global Food Fight

The spike in food prices is a global crisis, and it is destabilizing politics and economics everywhere. Food prices have doubled in the past two years, and most signs indicate they will stay high. Not surprisingly, the poor will bear the heaviest burden. Household surveys show that the poor already devote half of their spending to food. Inevitably, this percentage will rise sharply, cutting into what people have left for basic expenses like healthcare or shelter. This crisis, which caught governments by surprise, is undermining much of the progress that was made in lifting people out of poverty in the past 10 years. The World Bank estimates that high food prices will quickly pull 100 million people back below the poverty line.

The poor are not only being hurt by the food crisis more than anyone else, but they are also being blamed for it. U.S. President George W. Bush, for example, noted that when poor countries like India prosper, people there "start demanding better nutrition and better food." Therefore, he said, "demand is high, and that causes the price to go up." This view is widely shared by politicians, economists, and journalists alike. I echoed it myself in a recent column. But although the emergence of a global middle class is undoubtedly a factor in driving up food prices, it is not as important as most commentators think. We are blaming the wrong people.

That is one of the surprising conclusions of Donald Mitchell's analysis of the food crisis. Mitchell, who is the World Bank’s expert on agricultural commodities, argues that while the poor, especially in Asia, are indeed eating more meat, this increased consumption is not the cause of the spike in food prices. Take, for example, the global consumption of rice and wheat. Between 2000 and 2007, the global consumption of rice grew by 1 percent a year; consumption of wheat grew even more slowly. Meanwhile, meat consumption soared. These trends seem contradictory because when you eat chicken or steak, you are essentially consuming grains, which are the main raw material used to raise these animals for human consumption. In fact, the demand for both rice and wheat has not matched the increase in the world's population -- that is, consumers. If meat consumption in Asian countries explained today's higher grain prices, then the demand for grains should be consistently high and countries like China and India would be unlikely to have surplus grain to export. But, as Mitchell notes, the growth in demand for these grains in the past seven years was slower than the increase in demand between 1995 and 2000, when international prices were stable and Asian consumption had yet to boom. Moreover, China and India became net grain exporters in 2000, despite their growing populations and their rising meat consumption.

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