Supply and Demand Influences on Food in the Recent Years

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Introduction

Food consumption trends have been changing since the agrarian revolution. The processes of food supply and demand have been greatly influenced by various factors that are related to culture and social evolution. Numerous researchers also indicated that the supply of food was locally-based since the distribution system was limited. As a result, the supply and demand for food were only functional for local crops since the distribution patterns were greatly influenced by weather, growing conditions, diseases, and pests, among other factors. However, shifting supply and demand trends have been inescapable due to the improvement in food preservation methods.

As a result, food trading is not only conducted at the local level but also on a global scale. Due to the effect of trade, stability has been achieved at the prices of food products. Nonetheless, the increasing population has significantly amplified the demand for food worldwide. This situation has resulted in constantly inflating food prices. This essay provides an evaluation of various factors that have influenced the supply and demand for foods in recent years.

Escalating Food Prices and its Volatility

According to Ortiz, Chai, and Cummins (2011), the price of food is a function of its demand and supply in the market. It is noted that when the demand for food increases when the supply is constant, its price tends to rise. On the other hand, if the demand for food falls under constant supply, the price reduces (Ortiz et al., 2011). A rise in the supply of food at a constant demand causes the prices of food commodities to fall. On the other hand, a fall in the supply of food commodities at a constant demand results in escalating prices. Therefore, it can be summed up that the current prices of foods have been increasing due to falling supply and increasing demand. The amplified demand for foods worldwide has been noted in the fastest growing populations in countries such as China and India, among others (Ortiz et al., 2011).

Abbott, Hurt, and Tyner (2009) noted that there was a decline in food prices between 1961 and 2002. Although this situation lasted for a short time, there was a 64-percent rise in food prices from late 2002 to 2008 at the global level. In 2003, the prices of both wheat and maize tripled, while the prices of rice increased five times (Abbott et al., 2009). The prices of other commodities such as milk also tripled while beef and poultry products doubled. Various factors that caused the escalation of food prices included increased energy prices, biofuel production, income, population growth, urbanization, and globalization, among others (Abbott et al., 2009).

Other issues that have led to increased food prices are climate change, water constraints, and poor infrastructure. Recent natural disasters such as the tsunami in Japan have also led to the destabilization of the food market. Kaufman (2010) reveals that this disaster increased the prices of seafood by about 6-percent. The prices of vegetables have recently increased by approximately 50-percent due to the damage of crops in Australia, Russia, and South America, among other countries (Kaufman, 2010).

Furthermore, the increase in oil prices at global levels has also inflated the costs of transport, packaging, and processing of food. This phenomenon has significantly influenced the increase in food prices globally (Beddington, 2010). Food scarcity has been shown to drive up the prices to almost unaffordable levels. In fact, various statistics show that many people who live on 2 US dollars in a day will not afford various foods in the near future due to the ever-escalating prices. It is further projected that the number of people who will be hungry will increase to about 1.2 billion by 2025 (Clapp, 2009).

Most international macroeconomic factors play a crucial role in influencing the volatility of food prices. The US dollar is currently becoming weaker in the global market. Due to the prevailing price volatility, the state of the global economy has resulted in an increased dampening of the production incentives, especially in the underdeveloped countries. This situation has led to increased dependency on imported foodstuffs, thereby increasing the market prices (Serra & Gil, 2012).

Government Regulations

Government regulations have also been responsible for the supply and demand for food in recent years. The government plays a key role in determining the prices of food commodities. For example, various government subsidies and mandates on the use of ethanol have ensured an increase in demand for maize, especially in the USA. As a result, vast lands have been dedicated to the production of corns. This situation has reduced the land meant for the production of other food crops. The effect of such decisions has been seen in the skyrocketing food prices (Fulponi, 2006).

Most governments have emphasized the restriction on the use of herbicides, pesticides, and fertilizers, among others, agrichemicals. Although this move has played a significant role in the conservation of the environment, it has resulted in reduced crop yields. This situation has further abridged the supply of food; hence, increased prices have been noted (Fulponi, 2006).

The USA government is encouraging individuals and organizations to conserve the available water resources for use in farming. For instance, farmers in the US have been given incentives to reduce the usage of land in crop planting in an attempt to save water. This idea is seen as a factor that has played an enormous role in the reduction of the food supply in the country (Fulponi, 2006). Elsewhere, governments have been strictly implementing the import tariffs and export taxes to traders who supply food commodities to various countries. This situation has distorted the supply and demand for food commodities. The effect of this plan has been noted in the constantly increasing food prices around the world (Fulponi, 2006).

Interaction of various Commodities in the Market

Most commodities in the market have interactive prices. An example is seen in the demand for corns and soybeans in the Chinese market. These commodities have led to an increase in the prices of other products, such as eggs in the US. It is noted that grain prices have led to an almost 23-percent increase in the prices of eggs in the United States. The increasing costs of grains for animal feeds have also amplified the prices of certain foods such as beef and pork. It is also predicted that most foods will become more expensive because of the interactive prices of various commodities in the market (Belke, Bordon, & Volz, 2013).

Food Scarcity

Harris, Chapman, and Monfort (2010) affirm that the increasing growth rate has heightened food scarcity worldwide. The present world population has led to the scrambling of the little available food reserves. Accessible foodstuff cannot successfully meet the demands of the population. The rate production is declining, as noted in the present-day lower yields and limited land for cultivation (Harris et al., 2010).

Culture and Social Exchange

The culture and social behavior of people have influenced the eating and consumption patterns globally. For instance, Trostle (2010) reveals that the consumption of meat has reduced tremendously. This trend has increased various business opportunities, such as the production and distributions of fertilizers, biotechnology services, and farming machines. The use of conventional intensive farming is currently on the rise. Since this undertaking can damage the environment, most people are motivated to adopt agricultural systems that are sustainable. The culture of farming has also been changing in recent years as farmers embrace sustainable agricultural practices to promote food production (Trostle, 2010).

Conclusion

The essay has elaborated on various factors that have influenced the demand and supply of food in recent years. It is noted that the global population will continue to increase. In addition, natural disasters that are beyond the control of human beings will continue to affect the international demand and supply of food negatively. Governments should review the implementation of ethanol subsidies, moderation of farming funds, and regulation of agricultural tariffs and taxes with a view of increasing the supply of food to meet the demands of the ever-growing population. Irrigation plans should also be initiated to boost farming activities, especially in dry areas. Besides, the international governments should work together to ensure sound regulation of the skyrocketing fuel costs that have tremendously inflated the food prices worldwide.

Reference List

Abbott, P., Hurt, C., & Tyner, W. (2009). Whats driving food prices? Web.

Beddington, J. (2010). Food security: contributions from science to a new and greener revolution. Philosophical Transactions of the Royal Society B: Biological Sciences, 365(1537), 61-71. Web.

Belke, A., Bordon, I., & Volz, U. (2013). Effects of global liquidity on commodity and food prices. World Development, 44(1), 31-43. Web.

Clapp, J. (2009). Food Price Volatility and Vulnerability in the Global South: considering the global economic context. Third World Quarterly, 30(6), 1183-1196. Web.

Fulponi, L. (2006). Private voluntary standards in the food system: The perspective of major food retailers in OECD countries. Food policy, 31(1), 1-13. Web.

Harris, T., Chapman, C., & Monfort, S. (2010). Small folivorous primate groups exhibit behavioral and physiological effects of food scarcity. Behavioral Ecology, 21(1), 46-56. Web.

Kaufman, F. (2010). The food bubble. Harpers Magazine, 321(1922), 27-34. Web.

Ortiz, I., Chai, J., & Cummins, M. (2011). Escalating Food Prices: The threat to poor households and policies to safeguard a Recovery for All.Web.

Serra, T., & Gil, J. (2012). Price volatility in food markets: can stock building mitigate price fluctuations?Web.

Trostle, R. (2010). Global Agricultural Supply and Demand: Factors Contributing to the Recent Increase in Food Commodity Prices. Collingdale, PA: Diane Publishing. Web.

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