More on Livestock and Food Price Volatility

It is not difficult to understand that higher world food prices exacerbate food insecurity since it means that the world’s poor are able to buy even less food (roughly 1 billion people live on less than $1.25/day). The more complex question relates to the source of elevated food prices. Although biofuel production and agricultural speculation from the largest agricultural trading companies (ADM, Bunge, Cargill, and Louis Dreyfus) get a lot of attention, livestock production is perhaps the most significant factor, since producing animal-based foods requires that large amounts of agricultural land be used to produce feed, such as corn and soy, that is inefficiently cycled through animals to produce calories rather than being used to cultivate food for direct human consumption.

A 2011 report entitled “Price volatility and food security” by the Committe on Food Security – an intergovernmental organization within the UN system – recognizes the heavy impact of the livestock sector on food security, stating:

It appears increasingly clear that the unlimited demand of rich consumers for food products generates negative pecuniary externalities for the poorest consumers…we know that the consumption levels of the world‘s richest countries cannot be extended to everyone in a world that looks set to grow to include nine billion people…The significant expansion in the production of animal products also raises questions as a number of associated costs are not internalized in prices, and because industrial meat production places significant demands on cereal stocks and freshwater reserves. Moreover, the livestock industry makes a significant contribution to greenhouse gas emissions…using FAO projections, by 2050 the livestock sector alone may either occupy the majority of, or considerably overshoot, current best estimates of humanity‘s safe operating space.”

Another 2011 report entitled “Price volatility in food and agricultural markets: policy responses” coordinated by the FAO and the OECD in collaboration with IFAD, IFPRI, the IMF, UNCTAD, the WFP, the World Bank, the WTO, and the UN HLTF mentions rising demand for animal products as a factor in elevated food prices, though puts much less empahsis on this point:

Stronger demand for food crops and animal products in conjunction with slow growth in agricultural productivity and low stocks results in upward pressure on prices.”

Without a doubt, the rising demand for animal products in developing countries and the persisently high demand for them in the US and other developed countries has played a large role in elevated food prices, though the extent to which other factors such as biofuel production and commodity speculation have also had an influence is unclear. If the consumption of animal products continues to grow, not only are prices likely to continue rising, but shortcomings in net world calorie production might become a reality; right now, there is enough food produced worldwide to nourish all humans, but in the future this might not be true as more and more agricultural land is dedicated to producing meat, eggs, and dairy for those that can afford such foods.


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