October 17th, 2011
07:00 AM ET

How to curb rising food prices

By Fareed Zakaria, CNN

All over the world, from China to India to the Middle East, people are worried about the price of food. Poor countries paid 20% more for basic food products in 2010 than they did the previous year. Some say the Arab Spring was triggered by food inflation as rising costs were causing public discontent. Even here in the United States, your daily peanut butter and jelly sandwich is going to cost a lot more - peanut prices have doubled this year.

The U.N.'s Food and Agriculture Organization, or the FAO, measures the international prices of a basket of food staples - wheat, rice, sugar, meat - and its data show that prices reached an all-time high this year. There's good news and bad news here. First the bad news: Things are going to get worse. The FAO published a report this week called Food Insecurity in the World. It warns that "high and volatile food prices are widely expected to continue in the future."

The are many reasons. New entrants to the middle classes want more food and more meat. This month the world is expected to welcome a baby who will bring our population to seven billion. That number will rise to 9 billion by 2050 - and we'll need to produce 70% more food than we are right now just to meet the increased demand. Meanwhile the world has seen a surge in extreme weather - from Australia's droughts to Russia's wildfires - which has an impact on food production. And these weather patterns are expected to continue.

So what can we do? Well, the best way to get prices down is through increased productivity. If we can transform food production, making more food at lower costs, that will keep prices down. The FAO's report has a number of policy suggestions - among them, improving market information systems and investing in agro-research. By the way, that means getting over phobias about genetically modified foods.

But here's the good news I promised. I came across another report this week that had real examples of how to implement these solutions. One answer might lie in the mobile phone. The consulting group Accenture conducted a study commissioned by Vodafone. It found that the use of mobile phones among farmers could increase agricultural income by 138 billion dollars across 26 of Vodafone's markets in 2020.

While 70% of people in the developing world now have mobile phones, only one in four have bank accounts. Mobile banking could improve those numbers for farmers - increasing access to financial services, to the marketplace and streamlining what is currently an inefficient supply chain. If farmers know what prices for their goods are in real time, they can bargain better and take out the middlemen who jack up prices and hoard food.

More than 1 billion people around the world are employed in agriculture. Of those, 60% are small-scale workers. These farmers are often isolated, have limited transport or access to basic financial services. A mobile phone could go a long way toward changing their predicament - and increasing their output.

It's just the beginning. We talk a lot about the need to spur innovation on this show: in technology and in advanced manufacturing. This is just as true in agriculture. Grain yields increased by 126% from 1950 to 1980, but only 47% since then. Information technology is just one part of the solution, but it's a powerful tool. And you don't need the new iPhone with all that voice recognition. Any old mobile phone will do.

For more of my thoughts throughout the week, I invite you to follow me onFacebook and Twitter and to visit the Global Public Square every day. Also, for more What in the World? pieces, click here.

soundoff (58 Responses)
  1. American Citizen

    As I just posted on a different article, I've never seen so much food on store shelves as there is today. I do not see a valid food shortage at all. This is misrepresentation. In fact, all I do factually see are the abundant food sources with exorbitant prices being attached to them with this bogus excuse. People plant more food and raise more food when the population increases. What kind of morons will believe this schmuck that keeps glooming and dooming readers? I say – stop listening to fools that make such claims on baseless terms. When I see a news reporter standing in an empty field that was recently a significant farm for the United States, then I'll start believing there is a food shortage. (And this discounts any former farmers now CEO's of a corporation that simply abandoned their livelihood for a new one). There's food! And plenty of it! Fools!

    October 17, 2011 at 6:31 pm | Reply
  2. midgick

    stop paying subsidies to the farmers and encourage them to produce that we can feed our own and export to the rest of the world. This means more taxes for the government, more work for the unemployed. We have fantastic and fertile farmland which we have slowly over the years encouraged farmers not to use.
    This also means encouraging farmers to keep their farm and others to invest in out farmlands.


    October 17, 2011 at 11:07 pm | Reply
  3. cpc65

    Great. We'll have to switch to turnip butter.

    October 17, 2011 at 11:23 pm | Reply
  4. b

    Why do some countries and some people think its their duty to populate the earth? 1 billion people in 1 country?

    October 18, 2011 at 1:40 am | Reply
  5. Greg

    I big point was missed and it was food speculation. A new theory is emerging among traders and economists. The same banks, hedge funds and financiers whose speculation on the global money markets caused the sub-prime mortgage crisis are thought to be causing food prices to yo-yo and inflate. The charge against them is that by taking advantage of the deregulation of global commodity markets they are making billions from speculating on food and causing misery around the world. Good old fashion greed is ultimately the cause of higher food prices.

    October 18, 2011 at 7:29 am | Reply
  6. unsheepled One

    Sir you can eat all the gut killing GMO Frankenfoods you want. I reserve the right to eat organic.I rather pay at the grocery store /farmers market than at the DR office and pharmacies. But then you are a mouthpiece to those who pay your salary , you gotta speech that way. There is no food shortage except that is man made by greedy corporations . But then no one here is interested in truth.. or they would not parrot so much drivel

    October 18, 2011 at 11:30 am | Reply
  7. DoNotWorry

    I don't always agree with Fareed, but this is completely dumb. A cell phone is going to grow more food, how? I have grown food on my own land for over 20 years, and didn't produce even one extra carrot after I bought a cell phone. I can't believe you told us to eat GM foods... give me a break, they aren't even better products, they just make a lot of money for Monsanto. I think Monsanto is paying Congress enough to protect their interests. Number one cause of cost increases for food is globalization... everything you put in your mouth being shipped on average 1,500 miles? Absurd. I eat locally produced foods from my farmers market, but as my new garden gets as productive as my old one, I will eat LOCAL, thank you very much. Seed Savers and home grown. Put Monsanto and its frankenfood out of business.

    October 19, 2011 at 4:28 am | Reply
  8. ruchi

    good read, easy statistics! definitely to be shared with people for gen awareness

    October 29, 2011 at 3:58 pm | Reply
  9. Speedy Bubbles - Bubble Shooter - Play Bubble Shooter Games

    Great story, I am going to bookmark this.

    January 26, 2012 at 12:12 am | Reply
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