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Increasing Food Prices


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Increasing Food Prices

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