News

May 12, 2008

Policy, Population, And Speculation: The Economics Of Soaring Food Prices

By Andrew Adamson

The much-maligned English philosopher Thomas Robert Malthus postulated that infinite growth from a finite resource is unsustainable and is likely to end in catastrophe. Of course, Malthus was referring to pre-industrial agricultural society. But with the UN reporting that 100 million people worldwide are now facing severe food shortages, are his theories finally being vindicated?

Prior to the recent uplift, world food prices had been in decline for the past 30 years. In the UK, for example, the percentage of households’ disposable income spent on food has fallen from around 30 per cent 30 years ago to just 10 per cent today. This trend has been reversed recently as the prices of most major commodities have soared: data from the UN’s Food and Agricultural Organization shows price rises of 42 per cent for grains, 50 per cent for edible oils and 80 per cent for dairy...