Soaring food prices have been hitting the headlines. Wheat recently reached new records, but in real terms (after adjusting for general inflation) it has only recently recovered to the levels it traded at in the early 1970s. Indeed, between 1973 and 2000 the price of wheat dropped by 80 per cent. This time around it has already lost more than a third from its peak.
In a few dramatic days in April, the price of rice almost doubled, but it remains over a third below its all-time highs in 1971-72.
While remaining volatile, food prices can be expected to maintain high levels more consistently this time around. Emerging countries have much more spending power and are using it to consume more food. Between 1985 and 2007, China’s population trebled the amount of meat they ate, to 65m tonnes. That absorbed much of last year’s world increase in grain production to 2.1bn tonnes. 40 per cent of that was fed to animals rather than humans.
Biofuels took another 5 per cent, neatly offsetting the growth in output. Ironically, the rush to supplant petrol is itself putting pressure on oil prices: agriculture is one of the largest consumers of oil through fuel and power, transport and, particularly, oil-based fertilisers.
So we can look forward to high food prices over the coming years—although the price of a loaf of bread has already risen by far more than the cost of the wheat it contains.