The Commodity Price Dilemma

Low commodity prices leave little money for the farmers, whereas high commodity prices leave no food on the table for a lot more families. Central and Western Africa, Indian subcontinent and Bolivia face acute wheat/rice shortages. Sharply rising prices have triggered food riots in recent weeks in Mexico, Morocco, Senegal, Uzbekistan, Guinea, Mauritania and Yemen. The president of the Philippines, Gloria Macapagal Arroyo, has signed deals with Vietnam for rice supplies. Indonesia’s president, Susilo Bambang Yudhoyono, has reduced the restrictions on rice import (high prices might hurt them in the next elections). The Indian government has banned the export of non-basmati rice. The high prices have been attributed to famines, high oil prices, high meat consumption (causing a surge in consumption of cereals) and biofuels. A recent article in Economist argues that even though the food stockpiles are running at lowest levels in 25 years, there is still plenty of food for everyone. The article argues for changes in food-aid programs.

Economist Article – Food for Thought

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