By: Fenny Oyare
There is growing consensus that food prices have increased due to fundamental shifts in global supply and demand.
A variety of forces contribute to rising food prices: high energy prices, increased income, climate change and the increased production of biofuel.
Income and per capita consumption in developing countries has increased; consequently, demand has also risen.
Biofuel policies adopted in developed countries also explain the growth in demand.
Furthermore, the food supply has not increased sufficiently at a time when grain reserves are declining and land and water availability for food production has decreased.
Changes in food supply and demand have been accompanied by predictable effects in terms of pricing and have been further affected by the rise in the cost of non-renewable resources.
In light of the above, the combination of factors driving up food prices has led to a growing consensus that this increase is a structural rather than a cyclical phenomenon.
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