Excessive droughts in Western Australia and Russia,unprecedented floods in Pakistan, as well as the current droughtoutlook for parts of Argentina and Brazil, not only captured mediaheadlines in 2010 but also tightened the supply of key agriculturalcommodities.
|As a result, prices for food items in many developing countriesare increasing, although not (yet) to the extent of the 2007-2008food crisis.
|And the increasing wealth of a growing population in the Asianemerging markets is leading to more demand for higher-protein fooditems such as beef and dairy products. Additionally, the biofuelindustry is competing with the food sector for the sameagricultural commodities.
|On the supply side globally, yields of most commodities are justkeeping pace with the annual increase in population. Limited arableland and degrading soil in extensive agricultural systems—alongwith underinvestments in infrastructure—make it a challenge toincrease production to satisfy demand.
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