Macroeconomics Case Study

Global Food Crisis (A): A Silent Tsunami of New Demands?

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Abstract: First in the sequel, this case study takes the readers down the lane of economic logic and factoids covering the relationship between GDP and meat consumption; between oil prices and food prices; between bio-fuels and climatic benefits; between money growth rate and inflation; between trade liberalisation and food prices. While the case navigates through the criss-crossing debates on food crisis, the icing of the cake comes in the form of a paradox that proclaims food price inflation is not a problem but a solution to the food crisis.

The global food crisis of 2008 that manifested itself in ugly riots and irrational export restrictions have threatened to destibilise both politics and economics of the world. While the unprecedented spike in food prices have the spooling potential of pushing 100 million additional people towards starvation, analysts and experts including politicians and bureaucrats have started playing the blame game of pinning down the factors accountable for this silent tsunami. In the process two catch-all leads have been recognsied and powerful debates have been raised on the relative significance between the factors reducing food supply and the factors raising the demand for it. Whether the world wide fuel crisis has its roots in the US policy of diverting land from food grains to bio-fuel production or in the shift in dietary habits of the bulging middle class of the emerging economies to animal protein-rich food, has become an epic issue.

Pedagogical Objectives:

• To analyse the two categories of factors – demand-pull and cost-push – that cause inflation
• To examine the unique role of fuel in food price inflation
• To explain the impact of inflation on different categories of people
• To suggest solutions for food crisis by debating upon whether food crisis always means food price inflation.

Keywords : World Wide Food Crisis, Demand Pull Factors, Cost Push Factors, Food Price Inflation, Inflation vs Deflation, Bio-fuel production, Trade Liberalisation, Food Protectionism, Food Soverenity, Emerging Economies and Meat Consumption