The sub-prime mortgage crises in the US and its effect on the global economy has unleashed a demon. The demon of continuously rising commodity(food) prices.
Since October'07 these prices have been soaring, non-stop. Looking at some of the parameters involved:
- perceived financial instability around the world led population intensive countries to hoard the commodities in an attempt to shield themselves from the inflationary effect.
- depletion of oil reserves put a pressure on the demand for bio-fuels thus increasing the corn prices. Demand for corn even led some south-american economy to shun soyabeans for corn(a very cautionary trend).
- Speculators, have always been behind any bubble. Gov. of India even had to put a ban on future trading of Rice and Wheat.
- China's emergence as an economy power. China now can be looked as a gateway which assists in echoing the effect of volatility in economies of the developed world to the developing nations. Redefining a truly connected world( for good and for the worse ).
This current food and agriculture crisis has become too complex, and beyond control of any one country's policy.
Welcome to The Mayhem.
