Food for the world

Long back when I was in Business School, I put forward a simple hypothesis to some of my classmates about how world food prices are going to fall in the next 50 to 100 years.

The reasons I cited were simple: 

• with the advances we have been making over the past few decades (computers,  global commerce & what not), we will find better & efficient ways to produce, store & distribute food over the next few decades  (if we can double PC speeds every year, how much time does it take to double world food production ;))
• there are still untapped food production sources that we currently don't know of (GM crops, arrid lands in Siberia/Africa and what not)
• in the near-term: India & China (~38% of the world population) - will be investing heavily in food production as their populations become richer

There are two data points that helped my argument at the time:

• the gradual increase in world cereal production - rice, wheat & maize - over the past few decades
• the way food prices have gone down in US because of improved food production, storage & distribution (restaurants like McDonalds' & BurgerKings were able to offer buck a meal, and still make a buck because of scale economies).
  

I hypothesized that - in the distant future - world will evolve to a place where food will not be a main concern - and that food production will outpace population growth (the exact opposite of what Malthus predicted).

A couple of my classmates laughed at my theory - and asked me to watch out for food prices over the next decade before I come to any conclusions. And looking at the markets now, their caution does sound right. There has been a dramatic increase in the food prices over the past few years, and it is mostly effecting the poorest of the world. 

The emergence of India & China, and the resulting hunger for food & oil - seems to have put lot more pressure  on the demand side of the equation - than the supply side for both food & oil. Some of the new technologies (GM Foods) are facing lot of resistance from the civic bodies in the emerging world. Rise of the middle-class is effecting the arable land - people are looking for bigger and better houses, and urban sprawl is becoming an issue.

I really hope this is a short-term predicament for the world, and that we will survive this imbalance without any major famines, and will take a few steps towards the Shangrila I was dreaming of in the next couple of decades.