Rising Global Food Crisis (Case Study Sample)

Rising Global Food Prices
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Rising Global Food Prices
The rising food prices have been on a very escalating rate and unlike in the past, it is majorly caused by demand and supply factors (Gregory & Ingram, 2010). A number of these factors that have seen food prices persistent increase include the demand for meat in economies such, as India and China. In the same economies, there are also a large demand for grains to feed pigs, chicken, and cows and it is out of these that the grains prices have risen. Reduced food production has resulted to low supply and with the rich families, the demand raises causing prices to increase. Finally, there has been an increase in demand for bio-fuels in areas such as, USA and Europe, which has seen grains being, used for fuels reducing supply for food hence an increase in food prices (Borlaug 2013).
(ii) (a) When an increase in demand for food crops occurs to be used for bio-fuels, so much of these food crops will be required by firms manufacturing bio-fuels reduce very little quantity for consumption. With increased demand for this food crop will always lead to increased prices through the law of demand.
 Price P2
 P1
Q1 Q2 Quantity
At the demand Q1, food crop will cost P1, which when increased to Q2 the price also increase to P2.
(b) Increased consumption of meat in large economies such as India and China becomes much higher than the quantity that the economy can produce and when the quantity supplied go below demand, the prices of meat increase (Desjardins 2010). This is facilitated by the wealthy families in these countries who have the ability to buy as much as they can, which may result to the artificial shortage hence an increase in prices of meat. Using the above graph, increasing the quantity of meat being demanded from Q1 to Q2 will translate to increase in price from P1 to P2.
(c) When there is adverse weather condition, farmers who supply food products such as food crops and animal products like meat. Unfavorable weather conditions like drought usually lead to poor production leading to lower supply than the real market demand. The table below illustrates how lower supply leads to the shortage, which translates to higher prices as shown below.
 P2
 P1
Q2 Q1
When quantity being supplied the decrease from Q1 to Q2 due to bad weather conditions then the price will rise from P1 to P2 leading to increase in food prices.
(iii). There are several ways in which the rising food prices can be solved one of which is the use of price control. The allocation of resources in various markets for food and the rising food prices is a challenge but cannot be competently solved by using price control (Burke & Tebaldi 2012). Fixing food prices by use of price control will mean that the market forces will not be given the opportunity to correct market problems naturally, which should be the case for a free market economy (Logan 2012). Interfering with the operations of the market operations will lead to other problems, for example, farmers will have the most difficult time to recover their cost of production in the event of unfav...