With rising food prices starting to kick in globally the specter of food fights is becoming a reality (hat tip to Nevil).

Riots have been seen in many countries now and food, like climate change, is starting to be seen as a national security issue.  The Philipines is facing major rice shortages which is almost unthinkable for a country where rice is a staple. It is also causing serious unrest.

Even here in New Zealand consumers are unhappy about paying 60% more for a block of cheese which has been produced down the road.

Its a difficult situation that will take some sorting out. Producers want the best prices they can get and so will sell into the international market. Subsidies continue to distort the market.

World Bank President, Robert Zoellick has suggested a move away from direct aid and an attempt to remove barriers, create local markets and improve local production.

About time! That’s what i like about Kiva which promotes empowerment and local solutions. That is the way forward. Forget about the huge projects of the 1970s and 80s which dropped so many developing nations into the debt trap. Create a level playing field and encourage local solutions.

I’ve mentioned Agflation previously and we’re starting to see more concern expressed at the official level. The UK Government’s Chief Scientific Adviser, Professor John Beddington, has weighed into the debate calling food shortages a problem that was as immediate as climate change. The driver of agflation is two fold: increased demand driven by population growth and increasing development and supply shortages caused by deforestation to grow biofuels.

These two drivers are causing major price rises in all food groups. This creates what might be called “real” inflation, a price rise in the cost of real goods as opposed to asset inflation which is more of a monetary phenomenon.

This is a real problem because it can’t be solved by the hammer of monetary policy though the myopists in their central bank ivory towers seem to think so.

I can imagine their conversation: “let’s raise interest rates so people eat less”.

In many countries people are exhorted to have more children especially in developed economies where birth rates among the middle classes have fallen. So how can we stop the population expanding and how are we going to feed all these people and do it in a manner than the ecosystem can cope with.

It’s a tricky question. One could argue that food shortages, famine, disease and natural disasters regulate populations. That may still be the case. But can we rely on that and should we given we are more enlightened, well supposedly.

Population growth was for a long time a favourite topic for policymakers but has only recently come back onto the mainstream agenda. There is no doubt that the growth in biofuels has played a major part in this and that governments who have set targets for biofuel supply may well need to go back and think more carefully about how the unintended consequences of this feel good policy will play out.

Back in January the Indy ran a story on the life and times of battery farmed chickens. As you might expect it didn’t make pleasant reading.

Now following the campaign against battery chickens The Independent reports an complete sell out of free range chickens in the UK.

Figures suggest that in 2007 the sale of battery farmed chickens fell by alomst 10 million birds whilst consumers bought 4.4 million more free range.

This is the consumer voting with their wallets and this is how it should be: a change in individual consciousness.

It’s also interesting the overall sales fell by nearly 5% suggesting that some consumers turned away from chicken altogether.  Again this is an outcome of raised awareness.

It just demonstrates what can be done when the consumer shifts.  

I came across this humdinger of a letter to Hillary Clinton at the Celsias site. Whilst it could be regarded as some kind of political stunt it does raise serious issues about the nature of our globalised food chain.

I have never been a fan of Monsanto and there despicable deeds have been well recorded. But as we have seen with the impact of biofuels, the whole food production process is changing and judging from the price increases not for the betterment of consumers. A new term has been coined: Agflation

In New Zealand we are seeing the benefits and costs of food price rises. Our diary farmers are raking it in but consumers are suffering. But consumers are taking action; they are eating less meat and dairy; they are reinstating the veggie patch and being more circumspect about their shopping habits.

This brings several benefits: healthwise less meat and dairy is generally good for you; growing your own veggies creates a sense of self-sufficiency, gets you in touch with nature and you get to eat really fresh food; there is a greater focus on food and what you eat with many people finding it cheaper to avoid processed food and make your own from scratch.

Isn’t that what many activists have been calling for for a long time? And the reason that this is happening? The price mechanism.

People respond to price signals. And when the respond they can be very smart about it. There’s a lesson in here for the bureaucrats and activists.

Let’s hope they find it

It seems crazy that in a time of increasing obesity and poor nutrition that we still tax basic raw food. So people keep consuming highly processed junk which they claim is cheaper than good old fruit and vegetables.

A food researcher from Massey University has asked for GST to be removed from fruit and vegetables.  This is a step in the right direction at least. It will not cause a sudden shift in diet…let’s face it it’s hard to come off a high sugar and salt diet but at least it will start to compete on price terms.

How the government can continue to justify this tax is beyond me. But given that the whole tax system is dysfunctional that is hardly a surprise.