High food prices are here to stay. This should be a reason of great concern not only in less developed countries but also in the most dynamic emerging market economies.
Food prices have doubled in real terms in the last eight years. Nevertheless, in recent weeks, sovereign debt troubles in developed economies and the possibility of a new global recession has shifted attention away from high food prices. Something similar happened in 2008 with the financial crisis. The differences is that, while most agricultural commodity and food staples prices sharply declined during 2009 to later recover and surpass the previous peak, this time around most commodity prices seem resilient. If most analysts are right, and high food prices are here to stay, this should be a reason of great concern, not only in less developed countries but also in the most dynamic emerging
However, before explaining why this is the case, it is important to offer a diagnostic of some of factors behind the price increases.