Food prices

Jacques Diouf, head of the UN's Food and Agriculture Organisation, spoke recently of a 'very serious crisis' brought about by the rise in food prices and the rise in the oil price. Various global economic bodies are forecasting rises of between 10 per cent and 50 per cent over the next decade.

There have already been riots about food prices in Mexico, West Bengal, Morocco, Senegal and Yemen, although not in Edinburgh. But the factors behind the price rises in Leith are exactly the same as those in Mexico, or in China - where, last Wednesday, the government introduced price controls on dairy products, meat, vegetables and cereals. And while food price inflation hit 18 per cent last year in China, there's no good reason why they should not do that here. In fact, there are a lot of reasons why they should.

There have been four chief drivers of food price inflation in the last two years. The first is the huge rise in oil prices: $100 a barrel means food that is four-times as expensive to plant, irrigate, harvest and transport as it was six years ago. Some commodities brokers are now betting on oil going to $200 a barrel within a decade.

The second factor is the climate: drought, hurricanes and floods around the world last year made for terrible harvests - from Australia to the Caribbean and the United Kingdom. The third is the massive rise in the price of the staple-food commodities: wheat, maize and soya. This has been partly driven by speculation in the markets, partly by the demand for crops to turn into fuel.

Ethanol, a diesel-type fuel made from plants, must bear a lot of the blame. Since George Bush announced a rush to corn-based ethanol it's done well for American corn farmers - 20 per cent of whose harvest, subsidised by the government, went into fuel tanks rather than flour mills this year. Bush's taste for corn-based ethanol is based partly on trying to break the US's reliance on Middle East oil suppliers, and partly on a (largely misplaced) faith in its ecological credentials. (Its increasingly voluble critics claim that growing grain and then transforming it into ethanol requires more energy from fossil fuels than ethanol generates.). . .

But the last, and perhaps the most disturbing factor in the food price rise, is the financial boom in India and China. Around the world, and through history, people have eaten more meat as they have become richer. This is called the nutrition transition and it's now happening, very quickly, in the two most populous nations on the planet.

Hundreds of millions more people are now rich enough to eat meat compared with 10 years ago, with meat consumption in China more than doubling over the past 20 years. Meat also consumes food resources in a shockingly inefficient way: it takes 8kg of grain to produce 1kg of beef, and 4kg for pork. But each kilo of grain may need a tonne of water. And fuel oil is needed throughout the process, to fertilise the grain, pump water and to transport it.

Water and oil will both be in short supply this century. None of this is a surprise to Tim Lang, professor of food policy at London's City University, and an adviser to the government through the Sustainable Development Commission. 'I've been expecting this for two years', he says. 'The food system is entering a period of very significant restructuring, the first since the years after the Second World War. We may look back at the second half of the last century as an era of cheap food. It'll be like the Hundred Years' War, as we were taught it in school: a seminal moment in human history that's gone and will not return.'. . .

But could there be positive aspects to the food price rises? Some environmentalists believe so, including Tim Smit, founder of the Eden Project, near St Austell in Cornwall. 'Food is ridiculously cheap and we need to pay more - for our environment to be healthy, to cut down on carbon emissions and give more income to our farmers,' he said. 'It's said that 30 per cent of all food produced in Britain is thrown away. We may be getting back to seeing what the real price of food is, and that is healthy for producers and for society.'

So is there a morally preferable price level for food, at which people will value it more, and waste less? Raj Patel, a political economist at Cornell University in California, and author of Stuffed and Starved - on the politics of global food supply - says that allowing the market to set prices to make people behave better is not the answer. 'There are greens who are crowing that the price of food going up is going to benefit the environment and help the small producer,' he says. 'But the benefit of the rises is going to the contractors and the commodity brokers - not to the farmers or to developing world economies. Nor are supermarkets innocent victims of price rises. Sainsbury's and Tesco have recorded double-digit growth in profits last year.' . . .

But as the situation stands today, at least a third of the world - including the populations of China, Russia and India - have government-imposed price limits on their foods.

'That's how it's going, says Lang. 'You can't wriggle out of the facts. There are water shortages, climate change, energy price rises, population demographics, waste. We can't go on eating meat the way we do: the economics of it just won't add up.'