What's for lunch? Maybe a chicken sandwich, with a coffee, and a piece of fruit, one of your five a day. Let's analyse that. Well, the wheat that helped make the bread in your sandwich is up 69 per cent on this time last year on world markets; the chicken is 15 per cent dearer; coffee two thirds higher, and, if you like yours sweet, the sugar is 21 per cent costlier. That banana on the side is 15 per cent more pricey.
Yet irksome as rising prices are, food and drink accounts for just £12 in every £100 the average British household spends. And, overall, UK food prices are up by 4.5 per cent on 2010 – against 36 per cent on world markets. That's because many of the foods we consume are processed and packaged, and thus contain a large component of labour and capital costs. A rise in the price of cocoa, sugar and milk ought to make a bar of Cadbury's chocolate dearer, and it has. But a rise in wages for Bournville's workers will do more to inflate the price of your Twirl.
For the world's poorest though, the figures stack up more viciously. Typically, in a low-income country in Asia or Africa, food will comprise 50 per cent of family budgets, and food prices are a matter of life or death, or at least malnutrition. In those places, the staples people rely on are much closer to nature – a bowl of maize porridge against a Goodfella's deep-pan stuffed-crust chicken Provencal pizza, say. When maize is up 27 per cent in Kenya, rice 29 per cent in Bangladesh, mutton 36 per cent in Azerbaijan, for many it means going without.
There are a billion undernourished people on our planet, and their numbers are rising at a rate of 68 people per minute. Some 44 million people have been pushed into poverty because of the rise in food prices since last summer. The pressure on the world's poorest is fuelling political turmoil in the Middle East and Africa, and that in turn is disrupting production, as with cocoa from Ivory Coast, of a third of world supplies.
Who's to blame? The usual charge is that giant commodity trading companies such as Glencore, now blinking into the light as a publicly quoted company, have been abusing their power. The fact that the directors may receive around £100m each from the firm's £10bn flotation, and that the boss there is worth £6bn, doesn't help the firm's image. Expect Glencore to be one of the anti-capitalist movement's targets of choice.
And yet is food speculation really bad? We did not, for example, thank the traders for cutting the cost of food and other commodities in 2009. The best objective evidence – backed by the World Bank and the UN Food and Agriculture Organisation – is that they merely exaggerate existing trends, adding to volatility. Remember that speculators are just as adept at making money from falling prices as from ramping them up.
Yet think again about the dynamics. If, say, a commodities firm bought wheat a couple of years ago when prices were (relatively) depressed, and they now start to sell the stuff because they sense the end of the commodities boom – as Goldman Sachs declared last week – then they are actually smoothing price movements.
There are some commodities which are surprisingly thinly traded, such as rice, where only 7 per cent of production makes it to world markets. In others, such as tea, futures and options are unknown. Arguably, financial instruments should be used by governments and others to hedge and protect growers and consumers alike. That way the "financialisation of food" might be a good thing. That, after all, is how the great Chicago Mercantile Exchange was born, to help 19th-century farmers in the Mid-West cope with the vicissitudes of life, offering known prices for future crops. Yet even if speculators did add to the present inflation because they are hunting for alternatives to shares or bonds, it is hardly credible to blame them alone.
The burgeoning demand from China, India and other populous, fast-growing markets is surely the single biggest factor, and one turbo-charged by their growing preference for meat and poultry. That means more grains going to make animal foodstuffs, rather than being eaten by humans directly, an inefficient way of providing nutrition (the basic economic case for vegetarianism).
The further diversion of corn, sugar and cassava into bio-fuels is also a man-made phenomenon, sponsored by governments in the US, Indonesia and the EU, and one that has accelerated with every jump in the price of oil. Highly protectionist rules in the West, such as Europe's Common Agricultural Policy, have also held prices higher than need be, and locked poor producers out; export bans by Russia (wheat) and India (rice) have also added to strains. Freakish weather which has wrecked harvests is down to climate change, again a product of our own greedy habits.
Primitive supply chains and poor management of stocks in developing countries can massively inflate local prices, even when global prices are calm; Tesco, Carrefour and Wal-Mart, it has to be said, are rather better at delivering fresh food than the Mubarak or Gaddafi regimes.
High food prices, then, are rather like fixing the international financial system, an essentially global problem that requires an unprecedented degree of co-operation – so neither will happen.
This November, the Doha round of global trade talks, which have the potential to revolutionise markets, ease prices and boost global growth, will mark their 10th anniversary, a decade of, you might say, fruitless meetings while the world's hungriest starve. Glencore was not, I think, a party to those talks.
Hamish McRae returns next weekReuse content