Food crisis

For two decades, leading up to the millennium, global demand for food increased steadily, along with growth in the world’s population, record harvests, improvements in incomes, and the diversification of diets. As a result, food prices continued to decline through 2000.
But beginning in 2004, prices for most grains began to rise. Although there was an increase in production, the increase in demand was greater.
Food stocks became depleted. And then, in 2005, food production was dramatically affected by extreme weather incidents in major food-producing countries. By 2006, world cereal production had fallen by 2.1 percent. In 2007, rapid increases in oil prices increased fertilizer and other food production costs.
As international food prices reached unprecedented levels, countries sought ways to insulate themselves from potential food shortages and price shocks. Several food-exporting countries imposed export restrictions. Certain key importers began purchasing grains at any price to maintain domestic supplies.
This resulted in panic and volatility in international grain markets. It also attracted speculative investments in grain futures and options markets. Perhaps as a result, prices rose even higher.
At the moment, food commodity prices appear to be stabilizing. But prices are expected to remain high over the medium to long term with devastating consequences for the world’s most vulnerable populations.