Rising food prices

Key questions

How do rising global food prices impact upon people living in less economically developed countries?

In the UK, how have rising food prices affected food shopping habits?

During the last decade world food prices has risen considerably. A recent BBC news report highlights that the Food and Agriculture Organisation (FAO) food price index is nearly 50% higher than it was in 2003 and the price of cereals is up eighty per cent in the same period. Cereals include wheat, corn and rice, which are staple foods for many people.

When food prices are high, the poor eat less or switch to lower quality foods, which can increase malnutrition. Between 130 million and 150 million people fell into poverty in the last two years due to high prices (Department for International Development). Over one billion people were living on less than $1 a day and over 900 million people were undernourished, even before the crises hit (data taken from the Millennium Project website).

Four plant species - wheat, maize, rice and potato - provide over half of the plant-based calories in the human diet and it has been the sudden and dramatic increase in the price of these products that has caused distress and in some cases, food riots, around the world. 

Global food prices have been rising over the last three years; but in 2008 they spiralled considerably. Between 2007 and 2008 the average price of food rose by 56%, with wheat rising by 92% and rice, the staple of half the world, by 96% (article by economist Kaushik Basu BBC News).

The main losers have been poor people who live in cities in developing countries, who have faced higher prices for imported food on low incomes. The World Bank also warned that the high price of food could lead to developing countries missing international poverty targets. The recent dip in prices has provided some relief, but the FAO says 36 countries are still in need of external assistance because of continuing local high prices, crop failures or conflict. The main gainers have been farmers in rich and emerging market nations like the US, Brazil, Argentina, Canada and Australia, who are getting record prices for their harvests.

In the UK, where families spend about 20% of their income on food, compared to 60% to 80% in many poorer, less economically developed countries, there has been a noticeable change in many people's shopping habits. Changes have included less impulse buying, more shopping around for food bargains, and greater efforts to avoid food waste. The recent ‘credit crunch' has also led to a notable decrease in sales of organic and fairtrade foods, which are often more expensive than non-organic and non-fairtrade products. This online article in the Telegraph discusses this downturn, whilst this report suggests that sales of organic foods have been more negatively affected by the credit crunch than sales of fairtrade products.

Starter

Download the prices spreadsheet which shows price changes for rice and wheat. Make a graph of this information and answer these questions: How sudden was the price change? How severe was the price change? What is the current trend?

Main Activity

It is a fact of life that the world price of basic farming commodities fluctuates over the years. This causes severe problems for farmers who are unsure whether or not they will get a price that covers their costs and gives them a profit. For consumers, there is an inevitable knock-on effect when wholesale food prices rise, then food prices in the shops rise also - sometimes suddenly and dramatically. The impact on consumers in developing countries is very different to that in the developed world.

Download The Impact of Changes in Food Prices worksheet. The aim of this exercise is to understand the impact of variable food prices both for a government and for the people who depend on the imported food. The worksheet provides you with a set of imaginary food price graphs. Your task is to answer a set of questions relating to this information from the perspective of a Minister for Food in a poor, less economically developed country.

Further detailed data is available in the prices spreadsheet.

Download The Causes of Changes in Food Prices worksheet. This exercise looks at some of the causes of changing food prices. You are asked to forecast whether prices will rise or fall or stay roughly the same. The aim is to develop an understanding of the principle of supply and demand and the extent to which these two things can be controlled by human actions.

Plenary

In the UK, changes in food prices cause people to grumble but few people suffer hunger or malnutrition. In most cases, people buy less luxury food items, more of the cheaper ‘basic' own-brand food items, shop around for deals, and eat out less in take-aways and restaurants.

Compare the benefits of ‘shopping around' in different supermarkets by using the website My Supermarket to compare the cost of six food items listed in the worksheet how much can I save? What is the minimum total cost of these six items? Compare your totals as a class.

To conclude this activity, debate in class which luxury food items you would give up in order to save money. Give reasons for your choice.