If you are already cribbing about that rising food bill, there is more bad news in store for you. If the World Trade Organisation's present negotiations are any indication, the farm subsidy is going to end soon and that will further trigger increase in global foodgrain prices, making cereals costlier for several nations.
According to the current trends of WTO negotiations, developed countries may agree to a deal for significantly curtailing subsidies leaving global foodgrain market more open for rising economies such as Argentina, Brazil, India and China. Elimination of subsidies is likely to further increase food price.
The continued rise in food and commodity prices has put an enormous pressure on the developing countries, which are producing large quantities of food and sell the same to the rest of the world at reasonable prices.
There can be no lopsided priorities of certain countries that produce fuel at a cheaper cost to meet the domestic transport needs even if it leads to higher food prices elsewhere in the world. Bio-fuels are not only hurting poor consumers in Asia by driving up crop prices, they are also failing to help the region's farmers. A very selfish approach encourages conversion of food into fuel.
The only answer to this problem is higher domestic production.
According to a report from the UN Food and Agriculture Organisation, global food price index rose 40 per cent this year to the highest level on record. Food costs in the world's poorest countries including Iraq, Afghanistan, Nepal, Pakistan, and 20 African countries rose 25 percent to $107 billion.
Reports say farmers all over the world are applying high levels of fertilisers to maximise harvests of grain to take advantage of highest prices possible, driving fertilizer prices higher. World fertiliser prices increased more than 200 percent in 2007.
Reports say the price increase, from January 2007 to January 2008 involves diammonium phosphate price, which rose from $252 per ton in January 2007 to $752 in January this year, prilled urea rose from $272 to $415 per ton, and muriate of potash rose from $172 to $352.
The chain reflection of the rising price of fertilizsers is a leap in grain prices, reduced productivity in agriculture, and low production across many countries.
For instance, the price of one metric ton of corn rose from $3.05/bushel to $4.28/bushel. As the cost of inputs increase, so do the price of food.
The FAO has waded into the surging global commodity prices. It blames historical low food stocks, droughts and floods linked to climate change, high oil prices and growing demand for bio-fuels for the run up in global food prices.
The organization is calling for improved access to inputs like seeds and fertiliser in the world's most vulnerable countries and regions.
