Overestimation of speculative investment in food crops may be directly causing prices to increase, states their paper, which also underlines that a downward trend in price would affect investment and result in falling prices. Although in principle there is enough food in the world, "there is a distribution problem," it adds.
Regarding biofuels, their impact on world food prices should not be overestimated, believe the authors, pointing to the limited amount of agricultural productoin reserved for biofuels - only 5% of oilseed is used for biodiesel while 4.5% is allocated to ethanol, they say. Nevertheless, they believe prices remain high as there is an increasing demand from an as-yet unprofitablebiofuel sector.
The experts stress that "hunger is not a problem directly related to biofuels but often bad policies". Although "in principle, there is enough food in the world," there is a distribution problem, the paper argues, also citing poor harvests, high maize production, high energy prizes and export tax levies imposed for instance by Argentina and India among the factors impacting on food prices. Another factor contributing to the rise in prices is "the increased demand in Asia and depleting supply resources," it says.
According to experts, high prices will drop as a number of changes occur. As a result of high prices, some countries will resort to using agricultural land that is not in production, such as Russia or Brazil, while others will intensify their production in current agricultural areas.
Considering the current state of the price increase, investment in R&D and technology would improve the situation, while the high oil price will make biofuels more competitive as the fuel and food sectors become better integrated, the authors say.
The paper concludes that the volatile world food prices will result in less food for low-income consumers, countries with deficits in food supply which rely on imports and countries which receive food donations.