A worsening global food crisis is highlighting the unsustainability of our global economic system.
The food crisis appears to be mainly related to a rapid increase in the global price of food, especially grains such as corn, wheat and rice.
Rising prices, in a free market, are due to a difference between the rate of increase in supply and demand. In this case, demand for food is rising. At the same time, the supply of food is not rising as quickly OR the supply of food may even be declining.
There are three major factors leading to increased global demand for grain.
There are about 77 million more humans this year than last year.
There is increasing demand for meat and dairy, leading to increasing numbers of livestock, which leads to increased purchases of grain for feed.
There is increasing demand for biofuels (especially ethanol), leading to increasing purchases of grain to convert to fuel.
In addition, the grain supply is decreasing as countries such as Indonesia and Kazakhstan have banned food exports.
Does the price of oil directly impact the price of food? We know that the price of oil is determined at auction on the NYMEX. Is the price of grain is also determined at auction? This appears to be the purpose of the Chicago Board of Trade.
If the price of grain is indeed set at auction, then a doubling in the price of oil would not necessarily mean that the price of grain would also double. In the case of rising fuel prices at the same time as stagnant food prices, the farmer might not make a profit when it comes time to sell the grain.
This is not to say that the rising price of oil is not impacting the price of food. This is a question that is very important to explore, because the prices of food and energy are the prices that determine the state of the global economy, and indeed, the state of our very lives.
Notes
In Bangladesh, the issue of food is related to the issue of the sale price for textiles or garments. A question is, why are these workers paid so poorly that they don't even have enough money to buy the cheapest food to keep themselves fed?
* Textile - any material made of interlacing fibers or pressing fibers together
* Animal fibers - hair or fur (wool, cashmere, mohair, camel hair, angora, etc.) and cocoon (silk);
* Plant fibers - grass, rush, hemp, sisal, coir, straw, bamboo, pulpwood trees, cotton, rice, nettle, flax, jute, modal, pina, ramie, tencel;
* Synthetic fibers - polyester, aramid, acrylic, nylon, spandex, olefin, ingeo, lurex
* Mineral fibers - asbestos, basalt fiber, glass fiber, metal fiber Source on textiles: Wikipedia - Textile
Aaron Wissner is a teacher, educator, organizer and guest speaker. He is a graduate of the University of Michigan, with emphasis on mathematics, science, and education. Mr. Wissner has taught and consulted for sixteen years in public school, in areas ranging from mathematics, science, computers, to leadership and television news production. He is the founder and organizer of the grassroots Local Future Network, a non-profit educational outreach organization dedicated to saving Earth through culture change.