Food grain price volatility and the need for increasing food grain production

To control food price and to meet the rising demand for food, suitable agricultural land investment should be undertaken. To achieve a higher productivity, there is a need to allocate budget for food production programs and it also require policies, which can encourage farmers and private organizations to participate in increasing food grain production. The average annual net agricultural land investments in developing countries required to meet the growing demand is USD 83 billion. As per statistics, there is need to increase the total agricultural land investments in developing counties by 50% on an average, which includes the figure of private and public sectors farmers.

Malnutrition is the main cause of deaths in more than 2.6 million children in a year, while more than 450 million fail to get adequate food which is required for the proper development of the brain and body, according to the survey of a charity group. The survey found every hour 300 children died from malnutrition, which was caused mainly because the children did not get adequate nutritious foods and the rising food prices have made it difficult for families to get the basic. The world population will be 9.1 billion by 2050 i.e. 34 % higher than today and this increase will be seen mainly in developing countries, while urbanisation will continue, where 70% of the world population will become urban. The income level will increase and the richer population will need more food, for which the food production should increase by 70%.

A steep rise in the prices of food grains was seen in 2010, which was triggered by a combination of trends. Some of the factors, which cause volatility in food prices, are –

  1. Macroeconomic conditions – The increase in purchasing power of buyers and, strong demand for agricultural commodities are two main factors behind price determination.
  2. Oil prices – Oil and energy prices will also have direct impact on the price of commodities.
  3. Bio-fuel production – The demand for bio-fuel production is a permanent factor, which determines food grain price.
  4. Stocks – The stocks of wheat, vegetables oil and grains also have great impact on food grain price.
  5. Invest in commodity market – Food prices are also affected by the investments in commodity markets.

Comprehensive agricultural land investments

Hunger crisis will prevail even if the food production increases, in condition, when the produce fails to reach the poor and therefore, agricultural land investments are required which can fight hunger and target actions for comprehensive social service, food, assistance, sanitation, health and education. The agricultural land investments should have participation from local communities and the growth should be effective in benefiting the poorest by fulfilling the demand for food.

Many countries across the globe are dependent on international trade for food security and in coming decades the imports of cereals will increase. The financial crisis of 2008 interrupted the growth and development in many parts of the world, which can be addressed through long term plans and agricultural land investment. The most significant natural resources of the current era are land and agricultural land investment in parts of sub-Saharan region in poor countries to encourage technically advanced farming to fulfil the local food demand and gain lucrative returns through land appraisals and sale of harvests, is an attractive arrangement.