Demand

Rising demand is one of the most widely blamed causes for the current food crisis.  The causes of the increasing demand are two-fold. 

Emerging markets are growing, becoming richer, and demanding more food.  China and India saw the size of their middle classes expand at the rate of 30 percent and 70 percent per year, respectively.   With increasing income, the growing middle class is demanding more meat and other animal products.  In China, for example, per capita consumption of meat was 2.4 times greater in 2005 than in 1990 and per capita consumption of milk was 3.0 times greater.   As a consequence of the higher demand for animal products such as meat and dairy, a higher level of grains to feed animals is required.  In fact, each kilogram of meat requires seven kilograms of feed grain.   Not only are feed grains being diverted from food stocks, but farmers are transforming their farmland into grazing land.

The second major cause of higher demand is the rise in popularity of biofuels.  In its latest World Economic Outlook, the International Monetary Fund (IMF) claims that nearly half of the increase in consumption of major food crops from 2006-07 can be attributed to biofuel production.  An article in Financial Times alleges that 75 percent of the increase in global corn production over the past three years has been used in ethanol production.  Additionally, the International Food Policy Research Institute (IFPRI) estimates that biofuel production can account for 30 percent of the recent food price increase.  The U.S. government’s estimate is 3 percent, but that represents the “overall rise in retail food prices.”   There are significant differences between retail prices in the United States and prices in other parts of the world.

Biofuels are controversial not just because they divert crops from human consumption, but also because they establish deeper links between the agricultural and energy sectors.  The volatility of energy prices is widely recognized.  With food prices becoming so closely tied to energy prices, biofuel production is contributing to current and future volatility in food prices.  Smallholder farmers who have their entire livelihood invested in their enterprise cannot risk the fallout that could occur with such volatility in food prices.

Despite these numbers, attendees of the High-Level Food Summit in Rome were not able to deliver a conclusive statement regarding biofuels.  Some attendees called to put their production on hold, while others lauded the benefits they provide for the environment (though it is important to note that biofuels account for less than 1 percent of total liquid fuel consumption).  It was irresponsible for the leaders in attendance to leave the summit without a consensus.  The declaration that was read at the close of the summit stated that “it is essential to address the challenges and opportunities posed by biofuels, in view of the world's food security, energy and sustainable development needs.”  Those who are accountable for addressing those challenges, however, have divergent views muddled by politics and self-interests.  The U.S. and Brazil lead the group of supporters of biofuels, being the main producers of biofuels themselves. 

The controversy surrounding biofuels takes further irresponsible forms.  As the Minister of Agriculture and Livestock in the Congo, Rigobert Maboundou is planning to set aside a portion of the Congo’s 8.2 million hectares of arable land for biofuels production.  Currently, only 1.23 million hectares are cultivated with food products, and there are bids totaling 1.75 million hectares for the growth of palm trees, whose oil can be made into biofuels.   When there are millions of malnourished Congolese people, should the little opportunity they have for production be diverted to the production of biofuels?

If the production of biofuels is as important as many groups believe it to be, it needs to be addressed.  Currently, the UN “promotes the sustainable production and use of biofuels in developing countries, under conditions that can attract foreign and domestic investment.”  

Demand is projected to continue increasing.  IFPRI hypothesizes that demand for all cereals will increase by 20 percent globally by 2015.  By 2050, however, demand will be up by more than 33 percent in East Asia and the Pacific and 300% in Sub-Saharan Africa.   In order to mitigate the impact of increasing demand, international organizations must at a minimum devise a coherent strategy for dealing with new market realities.

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