food

When the capacity of the economy to supply goods and services (given by its factories, workers, etc.) exceeds demand, as happens in a crisis, there is pressure for prices to fall. A continued decline in prices (deflation) can in turn aggravate the economic crisis, because consumers expect prices will be lower in the future and so have an incentive to postpone purchases. They also fear that their wages (the price of labor) may decline along with other prices, and tend to save more. These factors further reduce demand and may create a vicious cycle, such as the one that happened in Japan in the 1990s.

But not all changes in prices are related to the underlying domestic economy. If price changes are expected to be "one-off" then the expectations of consumers about future prices do not change, and the logic above does not apply.

A little more than a month ago, the UN's Food and Agriculture Organization (FAO) introduced a database tool and a press release highlighting a rather disconcerting trend. As the global economic crisis worsened, food prices have fallen at an international level. But, surprisingly, the cost of food has not dropped at the same rate, or at all, in poor developing countries, according the FAO.

The new online tool allows for anyone to easily keep track of food prices in 55 developing countries, comparing the data on both domestic and international levels and tracking change over time. In East Asia, the tool includes data from China, Mongolia, Philippines, Thailand and Vietnam.

I am struck that the release of this data seems to be the first time I’ve heard of this trend. And apparently, even the experts aren't sure what is causing food prices to stay high for those who can least afford it. On his blog, Oxfam’s Duncan Green quoted FAO's Henri Josserand:

"The reasons for this 'stickiness' are not fully understood at this time. We hypothesize that there are several factors, possibly interacting in complex way. So far, we have not found any set of explanatory variables that apply to the whole sample. Actually, we are pretty sure that understanding the reasons will require in-depth analysis at the national or regional levels."

FAO says it hopes the database will provide information for "policy and decision-makers in agricultural production and trade, development and also humanitarian work." Hopefully, this database will help bring attention to high prices and food shortages in the places that can least afford them.

The World Food Programme launched a video competition a few months ago to raise awareness about hunger, and a jury has selected five out of the 70 submissions received. Now it's your turn to weigh in and help declare a winner for the first HungerBytes contest.

This will be determined by which video gets more views. So check out the finalists and then spread the word around your favorite one across the web by sending it to content-sharing sites like Digg, Facebook, Del.icio.us, and many others --easy to do from the page above. The author/s of the piece that gets more views by World Food Day (October 16, with the deadline set at 5 pm GMT) will be sent with a friend to a WFP project in Africa, Asia, or Latin America to make a video.

I'm getting a lot of satisfaction lately from this blog, and here is the very last example: in response to a rather light posting simply calling attention to an ingenious awareness campaign, I received this comment from reader S.Y. which provides actual data, links to recent, relevant reports, and makes a solid connection between food waste, development, and the East Asia & Pacific region:

"Despite its personal perspective style, your article on food waste awareness is very relevant to both the food crises recently making the headlines and the Bank's EAP region.

You are hardly alone in housing that ugly peach. Food waste occurs at different levels of a chain extending from harvesting to consumption. Household food waste is, as you point out, a relatively recent phenomenon in many developed countries (what the Bank delights in calling the North). This was publicised in July 2008 when Gordon Brown urged Britons to stop wasting food. The U.K. report "Food Matters" http://tinyurl.com/ypmpxq  says consumers in this country throw away 4.1 million tonnes of edible food (worth an average of £420--USD836 or €533 at today's rate) per household per year. Nearly a decade ago, a U.S. report estimated an annual waste of 10 times more, 41 million tonnes, of edible food at the consumer and food-service levels in that country! (Kantor et al., Food Review 1997 20:2-12).