Excessive droughts in Western Australia and Russia, unprecedented floods in Pakistan, as well as the current drought outlook for parts of Argentina and Brazil, not only captured media headlines in 2010 but also tightened the supply of key agricultural commodities.
As a result, prices for food items in many developing countries are increasing, although not (yet) to the extent of the 2007-2008 food crisis.
And the increasing wealth of a growing population in the Asian emerging markets is leading to more demand for higher-protein food items such as beef and dairy products. Additionally, the biofuel industry is competing with the food sector for the same agricultural commodities.
On the supply side globally, yields of most commodities are just keeping pace with the annual increase in population. Limited arable land and degrading soil in extensive agricultural systems—along with underinvestments in infrastructure—make it a challenge to increase production to satisfy demand.
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