Global Commodity Prices are soaring?

The United Nations’ Food and Agriculture Organization (FAO) opined that in near-term the prices of commodities are unlikely to come down due to a tight supply-demand situation. The Director General, FAO said recently that the world has only 4-5 million tons (MT) of cereal’s stock that can feed the global population for only 8-12 weeks!

The possible reasons are: increasing demand from the populated countries like China and India, natural calamities such as floods, and climate changes such as untimely rains, severe cold spell which resulted in the destruction food crops worldwide. Another important factor seems to be the diversion of crops such as corn for producing bio-fuels (ethanol). Financially, it may be more profitable to grow crops for producing bio-fuels than using the agricultural land for growing crops to produce food grains to feed people.

National and international bodies should prioritize the need of feeding billions, who spend more than 60% of their daily earning on food, rather than using the agricultural land to grow crops to produce bio-fuels. Diverting food grains (say corn) to produce bio-fuels should be avoided to bring down the prices of the commodities to affordable levels.