It is generally agreed that food prices have risen for three reasons:

1) The first is the sharp rise in demand for grain in China. The Chinese are increasing the quantity of meat in their own diet. (Meat production requires significant input of grain.)

2) the promotion of alternative sources of energy -- primarily ethanol -- by the governments of developed countries, which has significantly cut into the supply of grain in the world market.

3) ongoing droughts in Australia

This is wrong. All of these factors do contribute to the rise of the food prices, but they are also all foreseeable. They would not cause such a rapid increase of food in such a short period of time. The main problem has two aspects. Global inflation which is running at all time highs almost everywhere in the world. Second, and more importantly, government regulations. With a few exceptions all of the major exporters of wheat and rice have slapped either high tariffs or export bands. This has reduced the amount of food getting to market at the expense of local farmers and the poor around the world. The bands are in place to placate and protect restive populations usually in totalitarian countries from rises in food prices. The price rises happened rapidly because these controls were put in place recently and their effects on the markets have been dramatic.

There is no food crises. There is a crises of bad government.

I am William Gamble, JD, LLM, Ex MBA, KSC, a consultant specializing in emerging markets. I have been quoted or interviewed by ABC, CNN Asia, Bloomberg, Fox, CNBC, NPR and other television and radio stations around the world. I have published 24 letters in Financial Times and articles in Foreign Affairs, and Harvard International Review. I have been quoted USA TODAY, The Far Eastern Economic Review, The International Herald Tribune, The South China Morning Post, Sankei Shimbun. I have written two books Investing in China and Freedom: America’s Competitive Advantage in the Global Market. In the past year I have spoken to CFA societies in 10 countries and 8 US cities as well as conferences all over the world.

William Gamble

Author: Freedom: America’s Competitive Advantage in the Global Market

EMERGING MARKET STRATEGIES

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