The Ten Nations Which Suffer Most From The Global Food Crisis

The price of many agricultural commodities rose more than 25% from June 2010 to December 2010, according to a recent World Bank study. There are several reasons that the report is alarming. The first is that  there is a net increase of 44 million people who have been pushed into poverty because of these price increases. Relief for these people and others who may join them will not occur until global crop yields improve and the price of agricultural commodities begins to ease. This will not happen soon because drought can take product acreage out of circulation for several years. Populations are also growing in some of the most affected countries.

This 24/7 Wall St. analysis looks at the ten relatively poor nations where food price increases are the most dramatic. The research also considers food imports. Most food prices are local. When commodity supplies are plentiful, prices remain low.  Citizens of countries that are net importers of food often must pay exorbitant prices for these commodities.

Another aspect of commodity prices is crop yield. 24/7 analyzed data on the percent of a county’s population employed in agriculture compared to the percentage of GDP which is produced by the agriculture sector. This is an imperfect way to show the productivity of acres currently planted, but the contrast between nations with advanced agricultural practices and underdeveloped countries is substantial. Poor nations rarely have access to the most modern farm equipment, irrigation infrastructure, advanced seed production, and practices of crop rotation.

The ten countries on this list had the largest increases in price of one or more of the key commodities grown or used for food among low and middle-income nations.

The situation described in this analysis shows that extreme difference between being a net importer or exporter of a key commodity. Exporters can keep prices low within their borders. Importers, however, are at the mercy of global commodity prices.  It’s a problem that’s difficult to solve.

Some countries are particularly dependent on one commodity.  For instance, a country where 50% of the average caloric intake is from corn will face exceptionally high inflation of the price of corn unless it has a substantial production of corn within its own boarders. So, 24/7 also took into account the portion of food consumed in all the nation based on the source of the calories.

So, this is the 24/7 Wall St. list of The Ten Nations Which Suffer The Most From Global Food Prices.

Brazil
> Key Food Commodity: Corn +56%
> GDP: $2.194 trillion
> GDP Per Capita: $10,900
> GDP That Comes From Agriculture: 6.1%
> % of Population Employed in Agriculture: 20%

Dry weather in South America resulted in dramatically lower corn yields in 2010, driving up the price in Brazil 56% from June to December. The increased price has affected the cost of many other consumer goods because corn is used as animal feed and is in a variety of processed foods.  It also comprises 7% of Brazil’s diet.

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Kyrgyzstan
> Key Food Commodity: Wheat +54%
> GDP: $11.85 billion
> GDP Per Capita: $2,200
> GDP That Comes From Agriculture: 24.6%
> % of Population Employed in Agriculture: 48%

The price of wheat increased by 54% in Kyrgyzstan between June 2010 and December 2010, due in large part to the rise in global wheat prices.  One of the main reasons for this is droughts in Russia and Kazakhstan, from which Kyrgyzstan imported a large amount of wheat this past summer.  The price increase has a large impact on poor and middle class families because 40% of calories consumed in Kyrgyzstan come from wheat.

Burundi
> Key Food Commodity: Rice +41% and Beans +48%
> GDP: $3.418 billion
> GDP Per Capita: $300
> GDP That Comes From Agriculture: 31.6%
> % of Population Employed in Agriculture: 93.6%

Burundi is the only country in which there were major price increases in two separate agricultural commodities. The price of rice increased 41% and the cost of beans went up 48%. Just over 93% of the country’s population is employed in agriculture. The dramatic valuation changes, and their rapid swings have had a significant impact on farms which produce both foods. Furthermore, nearly 20% of the diet of Burundi natives come from these two commodities. Burundi’s incredibly poor population will be forced to further restrict their diets to a potentially dangerous level.

Bangladesh
> Key Food Commodity: Wheat +45% and Rice +19%
> GDP: $259.3 billion
> GDP Per Capita: $1,700
> GDP That Comes From Agriculture: 18.4%
> % of Population Employed in Agriculture: 45%

Although Bangladesh is a major producer of rice, the country is a major importer of wheat.  Due to droughts in high wheat-producing countries, Bangladesh was unable to import lower quality grains at the needed rate and was unable to negotiate prices on higher protein wheat.  Wheat makes up 6% of the calories consumed.  Rice, which makes up 70% of calories consumed, underwent a price increase of 19%, most likely due to increased demand.

Argentina
> Key Food Commodity: Corn +40%
> GDP: $596 Billion
> GDP Per Capita: $14,700
> GDP That Comes From Agriculture: 8.6%
> % of Population Employed in Agriculture: 5%

Argentina, like its neighbor Brazil, experienced severe drought in 2010 due to the La Nina effect. This dry weather has cut the output of several major crops, including corn and soybeans. As a whole, the international price of soybeans has risen at least 65%, more than any other key food commodity. This weather and has caused a 40% increase in the price of corn in Argentina.

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Vietnam
> Key Food Commodity: Rice +46%
> GDP: $278.1 billion
> GDP Per Capita: $3,100
> GDP That Comes From Agriculture: 20.5%
> % of Population Employed in Agriculture: 51.8%

Vietnam underwent the most significant rise in rice prices among developing countries from June 2010 to December 2010 — 46%.  Although the country has had good domestic harvests, prices have increased due to depreciation of the Vietnamese currency.  This has caused inflation and expectations of higher demand from importers.  Also, the Vietnamese government raised the minimum rice export price.  Rice makes up 59% of calories consumed in Vietnam.

Cameroon
> Key Food Commodity: Beans +43%
> GDP: $44.65 Billion
> GDP Per Capita: $2,300
> GDP That Comes From Agriculture: 20%
> % of Population Employed in Agriculture: 70%

Many factors, including bad yield per acre and inflation, have driven the price of beans up 43% in Cameroon. While beans are only 4% of the caloric intake of Cameroon, this rise comes at the same time as several other key agricultural commodities. This is particularly alarming, as Cameroon was the site of horrible food riots in 2008 which killed more than 100 people. Earlier this month, the government set up a panel to control food prices, in hopes of avoiding a repeat of the violence of three years ago.

Mongolia
> Key Food Commodity: Wheat +33%
> GDP: $10.16 billion
> GDP Per Capita: $3,300
> GDP That Comes From Agriculture: 21.2%
> % of Population Employed in Agriculture: 34%

Wheat, which accounts for 42% of calories consumed in Mongolia, increased in price by 33% from June to December 2010.  This was due mainly to droughts in large wheat exporting countries such as Russia.  The country’s food problem has worsened because of increases in meat prices following an outbreak of the foot and mouth disease and a severe winter in 2010.

Tajikistan
> Key Food Commodity: Wheat +37%
> GDP: $14.61 billion
> GDP Per Capita: $2,000
> GDP That Comes From Agriculture: 19.2%
> % of Population Employed in Agriculture: 49.8%

Wheat prices increased 37% in Tajikistan in 2010. Wheat represents 54% of caloric intake in the country. Unlike some of the other nations on the list, this Eastern European nation relies significantly on imports and is susceptible to dramatically higher international commodity prices. The World Bank estimates that the increase in food prices has had a significant impact on the poor in Tajikistan, where the poverty rate increased more than 3.6% in the last year.

Uganda
> Key Food Commodity: Beans +38%
> GDP: $41.7 billion
> GDP Per Capita: $1,200
> GDP That Comes From Agriculture: 23.6%
> % of Population Employed in Agriculture: 82%

Although beans only make up 5% of caloric intake in Uganda, the price of the commodity increased 38% in 2010.  A staggering 82% of Ugandans are employed in agriculture, and 53% of Ugandan farmers grow beans, according to a report authored for the Common Market for Eastern and Southern Africa.  Beans are also one of the most important sources of protein for many Ugandan households.

Douglas McIntyre, Charles Stockdale, Michael Sauter