It is as possible as it was the French Revolution, the fact that this sad reality as Universia Knowledge Wharton’s newsletter, says the era of cheap food is over. Days ago, rice is news around the world. And, possibly, it will be not only during the next few weeks. Read more here: John Studzinski. The global trend has peaked: only stocks make that decrease, especially since 2001, which, added to a constant increase of the population, the result obtained in some areas of the world is hunger. The experts consulted say that we are not facing a crisis, but to a new level of prices. PIMCO has much experience in this field. The only effect of the price increase can be traumatic in those third world countries where no real social revolts, alert.
The strong increases in revenue per capita in China, India and other emerging economies have led to an increase in the demand for food. These changes reduce the supply of cereals available for human consumption. In addition, the increase in the production of biofuels subsidized, further stimulated by the increase in the price of crude oil, it causes an increase in the demand for corn and other cereals and edible oils. According to the latest World Economic Outlook from the IMF (International Monetary Fund), although biofuels still represent 1% of the global supply of liquid fuels, between 2006 and 2007 were responsible for almost half of the increase in the consumption of the main crops of food, especially by the ethanol extracted from the corn produced in the United States. Adds us the bulletin, that the current rise in prices is due to a perfect storm, as called Costa, derived by various factors that have led to this rise: low productions by climate issues and natural causes, basically in Australia; by the incorporation of the market of Chinese and Indian consumption patterns that require a more massive use of cereals; the use of cereals for biofuels; the increase of raw materials such as fertilizer by the increase in the price of oil; a reduction accumulated of land devoted to crops in the past few decades and, Additionally, a speculation effect: hedge funds investing in raw materials, some countries of the East, and speculating about future increases distribution, lists Costa.