Rising food prices intensify food insecurity in developing countries
2008
S. Rosen | S. Shapouri
Recent increases in oil prices have raised serious concerns in low-income countries, both because of the financial burden of the higher energy import bill and potential constraints on imports of necessities like food and raw materials. This feature article by the Economic Research Service highlights how the use of food crops for biofuels, coupled with greater food demand, has reversed the path of declining price trends for several commodities. The authors examine how price increases for grains and oilseeds are of particular concern to low-income countries as these commodities constitute a large share of their citizens’ diets. Food import dependence in many developing countries has grown during the last three decades, leading to improved and more diversified diets. This trend can be attributed to higher incomes and slow growth in domestic food production. <br /><br />The authors conclude that the long-term food security impact of commodity price trends is uncertain because of differences in commodity composition among donor and recipient countries, and varying price prospects for exports versus imports. In the long term, high food prices could boost domestic production in developing countries and improve food security. However, net results depend on the magnitude of supply response to the price increases and supporting economic policies, including technology adoption. The financial capacity for investment in low-income countries is limited, so increased investment in biofuel production could distract from food production, thereby intensifying food insecurity. <br />
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