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Increasing Food Prices

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  • 1. Increasing Food Prices By Aric, Shaana, Kukesan, Noah and Ezra
  • 2. Table of Contents
    • Movie
    • Statistics and Background
    • Causes of Rising Food Prices
      • Economics of Food Prices
      • Natural Disasters and Disease
      • Ethanol Fuel: The Opportunity Cost
    • Effects on Food Prices
    • Solutions
  • 3. Statistics and Background (History)
    • Thomas Malthus (1766-1834)
      • British Economist & Demographer
      • Wrote An Essay on the Principle of Population (1798)
      • Predicted food shortages
        • Human population increases exponentially
        • Food production increase linearly
  • 4. Statistics and Background (Population Growth)
  • 5. Statistics and Background (Population Growth)
  • 6. Statistics and Background (Population Growth)
  • 7. Statistics and Background (Current Statistics)
    • http://www.worldometers.info/
  • 8. Statistics and Background (Food Production Growth)
  • 9. Statistics and Background (Food Production Growth)
  • 10. Causes of Rising Food Prices (Economics of Food Prices: Demand)
    • Food is always in demand all around the world, because it is a need and has no substitutes.
    • If the food market increased all of its prices, then its demand would remain the same, because food is inelastic.
    • If the price of a certain food product increases, people tend to look for a substitute product, but that is more affordable and/or convenient.
  • 11. Causes of Rising Food Prices (Economics of Food Prices: Demand)
    • As the price of a certain food product increases, demand gradually decreases.
    • The demand of food varies in different areas of the world.
    • As demand for an item increases, prices rise.
    • Demand determinants of a certain food product include:
      • Buyers’ Incomes*
      • Number of Buyers*
      • Buyers’ tastes/preferences
      • Prices of substitutes
      • *Also applicable for food in general
  • 12. Causes of Rising Food Prices (Economics of Food Prices: Supply)
    • When the price of food increases, the supply tends to increase
    • When price and supply increase, profits increase
    • If prices of a certain food product slip, then sellers supply less of the food product.
  • 13. Causes of Rising Food Prices (Economics of Food Prices: Supply)
    • Amount of supply varies in different areas of the world
    • When manufacturers respond to the price increase of a food product, they supply more, and thus bring the price of this food product down.
    • Supply Determinants affecting the supply of food include:
      • Cost to Produce
      • Number of Sellers
      • Technology Used
      • Prices of Related Products
      • Nature/Environment.
  • 14. Causes of Rising Food Prices (Economics of Food Prices: Scarcity)
    • Scarcity: the basic economic problem which arises from people having unlimited wants while there are limited resources
    • Because of scarcity, economic decisions must be made to allocate resources efficiently
    • This is not always the case, especially with food.
  • 15. Causes of Rising Food Prices (Economics of Food Prices: Scarcity)
    • Many countries lack the necessary amount of food to feed its population, and therefore food is scarce in those areas.
    • Food is plentiful in some areas, but since it is very expensive, many people can not afford food, and starve.
    • This is an ongoing worldwide issue that has yet to be solved.
  • 16. Causes of Rising Food Prices ( Economics of Food Prices: Elasticity)
    • Food has an inelastic demand because:
      • There is no substitute for food.
      • Food is a necessity .
      • Food tends to be a small fraction of income.
    • Food has an inelastic supply because:
      • Suppliers cannot instantly increase the production of food.
      • Food can not be stored easily.
  • 17. Increasing Natural Disasters (Historic Natural Disasters)
    • Dust Bowl
      • Series of destructive wind and dust storms that hit the United States of America in the 1930’s
      • Lasted about a decade
      • Caused from drought and over ploughing, and no crop rotation
      • Affected 100,000,000 acres or 400,000 km2
      • Food prices increased because of a much lesser supply due to lack of farm land
      • Farmers were without jobs or land and food was scarce
  • 18. Increasing Natural Disasters (Recent Natural Disasters)
    • Mad Cow Disease: Bovine Spongiform Encephalopathy (BSE)
      • Caused by infectious proteins' called prions (dead animal proteins)
      • Infects cows when ingested from food
      • First found in Canada in May 2003
      • The same month many countries closed of importation of Canadian beef or cows
      • Cost of Canadian cattle dropped from $1300 to $15
      • BSE infected cow was found in US but traced from Canada
      • US originated cow found infected with BSE, countries, excluding Canada
      • banned importation from US
      • Price increased due to lack of supply of healthy cows
      • Once BSE was controlled 100’s of cows killed to fix inflation
  • 19. I ncreasing Natural Disasters ( Historic Natural Disasters)
    • E. Coli(Escherichia coli)
      • Found in lower intestines of warm-blooded animals; generally cows
      • General contracted by eating uncooked ground beef
      • Caused people to be afraid to eat ground beef
      • Over supplied once was contained large amount of product was useless or outdated
    • Listeria
      • Caused by eating food contaminated with the bacterium Listeria monocytogenes
      • Found in maple leaf products caused mass recall and raise of price for companies other then them
      • People did not want to eat meat supply exceeded demand and product was destroyed
  • 20. I ncreasing Natural Disasters ( Historic Natural Disasters)
    • Desertification
      • Degradation of land in arid and dry sub-humid areas
      • Caused by overgrazing, over cultivating, increased fire frequency, water impoundment, ect.
      • Desertification is continuously reducing the supply of agriculture a country possesses
      • This increase the need for importing and the cost of the food its self
      • With continuing trends in 2025 Africa will only be able to physically feed 25% of its people leaving more starving
    • Midwest Floods
      • Flash floods in the Midwest in the US are continuously destroying food supplies increasing the cost and scarcity
  • 21. Increasing Natural Disasters (Predictions)
    • With the occurrences of natural disasters and food related disease people are continuously trying to fix these problems
    • Not all people have the kind of protection people in major countries such as Canada have
    • Once we can help control or reduce the effects of natural disasters and food related disease and illnesses we will then be able to fix the ever increasing food prices
    • Also be able to help those who are less fortunate
  • 22. Ethanol Fuel (Background)
    • Ethanol was one of the first chemical processes.
    • Late 1970’s: U.S. fuel industry introduces ethanol to reduce dependence on foreign oil.
    • There are different methods to produce ethanol fuel. These are:
      • Ethanol fermentation
      • The combination of ethylene (gas made from petroleum) with water.
  • 23. Ethanol Fuel (History)
    • The first American ethanol fuel that was 90% gas and 10% ethanol, and was called Gasohol or E10.
    • Simultaneously, Brazil introduced a 100% ethanol replacement for gasoline: E100.
    • E100 required specially designed vehicles and fuel pumps.
    • 1990’s: U.S. automakers create flexible fuel vehicles (FFVs) which use any mixture of ethanol and gasoline, containing up to 85% ethanol.
  • 24. Ethanol Fuel (Current Popularity)
    • Now, people drive millions of FFVs.
    • Most of Brazil’s automobiles are now FFVs
    • Ethanol has shown great economic and environmental potential as a fuel.
    • Ford, Chrysler and General Motors all sell FFVs
  • 25. Ethanol Fuel (Current Popularity)
    • Concerns have been raised regarding:
      • The decline in soil fertility due to the reduction of organic matter.
      • The decrease in water availability and quality.
      • The large increase in the use of pesticides and fertilizers.
    • As demand for ethanol fuel increases, food crops are replaced by fuel crops, resulting in a decrease of food supply, and an increase in the price of food.
    • Ethanol’s growth in demand is a factor for the increase of price of many foods, including: corn, barley, all grain crops, chicken, beef, cheese and animal food.
  • 26. Effects on Rising Food Prices (Extrapolating Data)
  • 27. Effects on Rising Food Prices (Predictions)
  • 28. Effects on Rising Food Prices (Predictions)
  • 29. Solutions
    • Check out the links and /or discuss below.