Global food prices are climbing for a number of reasons. Firstly is the fact that the world population is growing so fast, so the demand for food is climbing accordingly. Secondly, farmland is starting to be used to grow plants for fuel (corn) instead of food. Thirdly, energy costs in food production and transportation are being tacked on to food prices, as well.
In early 2011, these problems were compounded by poor weather, which saw global commodity prices hit record highs.
In basic economics, prices are determined by supply and demand. According to this simple formula, food prices will go up the lower the supply, or the higher the demand. Higher prices could, then, indicate that there is a food shortage.
However, in the food chain, there are a lot of factors that skew the perceived supply and demand of food products (the perceived numbers are what affect prices most, because they drive investors). The amount of food waste in production and consumption, and the unequal distribution of food, are two examples.
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