But if the Index is at its highest ever level, why aren’t we seeing riots on the scale of 2008, when (according to the International Food Policy Research Institute – pdf), 61 countries experienced unrest, with protests turning violent in 23 of them? And should we expect to see the global total of undernourished people climb back over the one billion mark next time the UN figures are compiled?

A few things make this food spike different from the last one.

First, this one is – so far – about a somewhat different set of food commodities. Whereas the 2008 spike was heavily concentrated in key grains – rice, corn, wheat, soya – this one is being driven more by meat, sugar and vegetable oils, which are less fundamental as staple foods in low income countries. Admittedly, corn has been rising strongly too – but rice, in particular, has so far not spiked (it hit $1,000 a tonne in 2008; it’s at $535 a tonne today – see the FT graph below).

Second, many African and Asian countries have actually had good harvests over the last year. As the FT points out, “while the international export price for corn jumped 45 per cent between May and November [last year], it declined by up to 10 per cent in parts of Africa”. Part of the backstory here is how well many African countries have done at investing in their agriculture sectors since 2008, through programmes such as CAADP - an interesting datum to stir in to the argument over whether low income countries should scale up endogenous production capacity and seek to reduce their reliance on international markets to meet their needs.

Third, while oil prices are high at the moment (around $95 a barrel), they’re certainly not at their 2008 peak level of $147 a barrel – a factor that helped drive food prices much higher as costs rose for fertiliser, transportation, processing, on-farm energy use and so on. (On the subject of what drove the 2008 spike, incidentally, this new IFPRI report is worth a look – it raises a sceptical eyebrow at those who argue the role of biofuels in that spike was overstated.)

Fourth, and perhaps most importantly, we haven’t yet seen a slide into panic measures that amplify the problem. The last food spike was a story in two acts, with the first part of the spike driven by fundamentals like rising demand for biofuels and the depreciation of the US dollar, and the second, steeper part of the spike driven in particular by export bans or restrictions imposed by over 30 countries. Although Russia imposed an export ban on wheat last summer, and India has recently restricted the export of some staple vegetables, we’re not in the trade meltdown scenario of 2008 – thankfully.

 But don’t breathe a sigh of relief just yet. The oil price may well rise higher over the year ahead, as emerging economy growth continues to power onwards. Further depreciation in the dollar would be likely to increase commodity prices. And above all, don’t forget climate change. Extreme weather could cause poor countries’ food outlook to darken substantially this year – as Oxfam’s Gawain Kripke puts it, the latest rise in food prices is “a grave reminder that until we act on the underlying causes of hunger and climate change, we will find ourselves perpetually on the knife’s edge of disaster”.

What’s going on? Wheat prices are soaring. A year ago, a tonne of wheat cost €141; today, it costs €231, and most of the rise has happened over the last few weeks. Meanwhile, meat prices have hit their highest level in 20 years. The overall FAO Food Price Index rose 5% during August, and is back to where it was in late autumn 2007 (when the food price spike was well underway) – though it’s still some way off its peak during summer 2008.

So why are prices rising? For wheat, the main driver has been adverse weather – principally in Russia, but also in parts of the EU, Kazakhstan, Australia and Ukraine. The effect has been compounded by export restrictions, again with Russia (which has banned wheat exports outright) the main driver. On meat, the issue’s more to do with demand (especially in emerging economies, where people are increasingly shifting to meat-rich ‘western diets’) – though the supply side has also lagged.

But why the sudden spike in media coverage? Media interest has stepped up over the last 24 hours because of two things that just happened: a food price riot in Mozambique that left 7 dead, and Russia’s announcement that it will extend its export ban on wheat for 12 months.

Is this 2008 all over again? No. Despite the adverse weather in Russia and other countries, the world as a whole is on course for a bumper crop this year – the third highest on record, according to the International Grains Council. Stock levels are also much more comfortable than they were in 2008, providing more of a buffer. And the 2008 food spike was greatly amplified by a concurrent oil price spike (reaching $147 at the top), which made food more expensive by upping fertiliser, energy and transport costs, as well as making it more attractive to put crops into biofuels. Today, by contrast, oil is at $76 – still high, by historical standards, but a long way off 2008 levels.

So there’s nothing to worry about? No, that’s not the case either. The situation could still get a lot more serious – if more harvests get damaged by extreme weather, if price bubbles develop through investors going long on futures markets, if the oil price starts rising, or if more countries start implementing export bans or restrictions.

Looking to the longer term – with food demand forecast to rise 50% by 2030, even as trends like water scarcity, climate change, intensifying energy security risks and competition for land constrain supply growth – there are strong reasons to think that 2008 wasn’t “just a blip”.

Most of all, remember that for many poor people, the food price spike didn’t end in 2008. The number of undernourished people in the world was 850m before the food spike; today, it’s over a billion – not surprising, when you reflect how high food prices have been since then by historical standards (again, see the FAO Food Price Index), or on the fact that poor people typically spend 50-80% of their household income on food.

So what do we need to do? See The Feeding of the Nine Billion for a full answer to this – but the short answer is, a) invest in a 21st Century Green Revolution that produces more food, more sustainably, more resiliently, and in a way that works for small farmers; b) scale up targeted social protection systems to protect people like the ones rioting in Maputo (and which make a lot more sense than price controls or economy-wide subsidies); c) start getting serious about making international agricultural trade more resilient, especially through better crisis management mechanisms and probably including new rules against sudden export restrictions; and d) do a serious global deal on climate change. And get a move on.

Update: FAO has called a summit meeting for 24 September to discuss rising food prices, probably to be held at their HQ in Rome.  That’s right, another FAO summit – because the last ones produced so many concrete outcomes.

And yes, they’ve managed to organise it for two days after the UN MDG summit, and slap in the middle of the UN General Assembly’s main annual debate (neither of which are due to take place in Rome, last time I checked). 

And we’ll have more from FAO on the subject of UN system coherence a bit later in the programme.

But as soon as you start to delve into the quant projections, you see that there’s actually a big difference between this year’s and last year’s report - and not an encouraging one.

Last year, the 2009 to 2018 outlook (summary) projected that over the decade ahead, ”average crop prices are projected to be 10-20% higher in real terms relative to 1997-2006, while for vegetable oils real prices are expected to be more than 30% higher”.

This year?  “Average wheat and coarse grain prices are projecte to be nearly 15-40% higher, while for vegetable oils real prices are expected to be more than 40% higher”. Most media coverage didn’t pick up on this (though the FT, as usual, did).

That’s a big deterioration of the outlook in just twelve months. So what explains it? I can’t immediatelymake out the reason, so I’ve emailed FAO’s press office to see if we can get some more detail for them. But as I noted in The Feeding of the Nine Billion (pdf), the OECD / FAO outlook is in some ways unduly optimistic – as in the past it has “largely overlooked the potential impact of long-term resource scarcity trends, notably climate change, energy security and falling water availability”.

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To see why, first take a look at what the oil price has been doing over the last year (Brent crude futures, $/barrel; h/t BBC):

Then, put that against the longer term background of what’s been happening since 2000 (slightly older data here, via Mongabay, but usefully puts the BBC graph above in context):

As the second graph shows, today’s level of just under $80 per barrel already brings us back to where we were in around July 2007 – and that’s during a still shaky recovery from what’s generally agreed to have been the worst global recession since the early 1930s.

This is a striking rebound in such weak economic conditions – and calls to mind the consistent warnings from the IEA over the past 18 months that the collapse in investment in new supply during the financial crisis and subsequent downturn has set the stage for a new oil price crunch as soon as recovery gets underway (not to mention the fact that IEA’s chief economist thinks we’re looking at peak oil as soon as 2020).

With the oil price headed upwards, food prices can be expected to follow – because higher oil prices make biofuels more attractive, and raise the prices of on-farm energy use, fertilisers, transportation, distribution and various other elements of our energy-intensive food supply chains.

Sure enough, if we take a look at the latest FAO food price index, we find that it too has been quietly heading upwards over the last few months – and is now likewise back at where it was in July 2007. At that point, of course, the food spike was already well underway, with the tortilla riots in Mexico City that served as a wake-up call for many policymakers having come almost six months earlier.

On top of this, remember the really key point that the fall in food prices that took place during the global downturn gave minimal respite to the world’s poorest people – precisely because even as prices fell, they were also getting hammered themselves by the downturn.

The starkest indication of that is in the global total of undernourished people (shown here in a graph from the FT); when you realise that we haven’t just lost the progress of the last few years, but are in far worse shape that at any time since the last 60s, you start to see just what a catastrophe the combination of  food / fuel price spike followed by global downturn has been for development:

As I’ve argued in numerous previous posts, we were never out of the woods on the food / fuel pincer movement; it was the collapse in prices following the credit crunch that was the blip, not the price spike that preceded it. And what’s most frustrating now is the extent to which policymakers have frittered away the chance we had to get onto a more secure footing.

Admittedly, they committed $20bn over three years for agriculture and food security at this year’s G8 in L’Aquila (although as a friend at the ONE campaign reminded me yesterday, even that cash isn’t new or additional). But what they’ve absolutely failed to do is recognise the fact that a great deal of what we have to do is at the transboundary level as well as on the ground in developing countries. For example:

- They haven’t taken advantage of lower food prices to invest massively in a new multilateral emergency food stock. Nor have they tried to agree new WTO trade rules to prevent sudden export restrictions – something which NAFTA did years ago, and which could have been done separately from the ailing Doha trade round.

- OECD countries haven’t faced up in any way to the massive contribution their biofuel support policies made to the food price spike: take a look at the US State Dept’s shiny new food security consultation document and see if you can find the words “biofuel” or “ethanol”.

- No-one’s set any serious analytical work in train to figure out exactly how a pretty much permanent move to triple digit oil prices would affect food prices – e.g. whether the biggest pinch point will come in fertiliser or in maritime trade costs, or in which crops will be most affected.

- And hardly any policymakers are yet willing to talk about the fact that the world’s middle classes – that’s you and me – are going to have to make some pretty significant changes to our diets if we don’t want prices of staple foods to lurch out of reach of the world’s poorest (that’s significant spelled l-e-s-s m-e-a-t).

Now, on top of all of that, it looks like policymakers are also in the process of fudging the one policy process that could manage oil scarcity and climate change at the same time: the Copenhagen talks on the UNFCCC post-2012 commitment period.

The problem, of course, is that once prices for oil and food rise beyond a certain level, we all go back into kneejerk / panic mode – and try talking about the need for cooperative long term frameworks then. Sigh. #Fail.

Update #1: the FT’s Alphaville blog notes that long-dated oil contracts are now trading at $100 / barrel, and that Goldman Sachs predict corn (as well as oil) will head skyward too:

Despite the large expected harvest, we continue to anticipate a decline in US and global stocks/usage from already low levels primarily driven by rising biofuel demand. Combined with our constructive views on energy, we believe that risks to our corn forecasts are skewed to the upside.

Update #2: the Guardian has an exclusive from an unnamed “senior official” at the International Energy Agency, who says that peak oil is already here:

“The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year,” said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. “The 120m figure always was nonsense but even today’s number is much higher than can be justified and the IEA knows this.

“Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources,” he added.

Alphaville notes that the report has created “quite a stir in the oil market” today, and gives some credibility to the idea that IEA should have been massaging the numbers.

Update #3: transpires that only $3 billion of the $20 bilion G8 food security pledge is new money, according to Avaaz, who are (justly) furious about it – sign their petition ahead of FAO’s food summit here. And while you’re at it, WFP really need your help too…

- With the news that President Obama has nominated Ben Bernanke for a second term, over at the New Republic Noam Scheiber assesses the merits of continuity at the Fed. Stephen Roach, meanwhile, examines the case against the incumbent chairman, arguing that Obama’s decision should open a “broader debate over the conduct and role of US monetary policy”.

- Taking us back to the depths of last September’s financial meltdown, Faisal Islam has some interesting insights into the collapse of Lehman Brothers as viewed from British shores.

- Elsewhere, debate continues apace about the rights and wrongs of releasing the Lockerbie bomber. Suggesting that “cock-up offers as convincing an explanation as conspiracy for the handling of Mr Megrahi’s release”, Philip Stephens argues that the decision highlights the “price of realism” in foreign policy.

- Speaking of which, in the latest edition of FP Magazine none other than Paul Wolfowitz assesses the realist credentials of President Obama; providing at once a telling insight into the mindset of a man at the heart of foreign policy making during the Bush years.

- Mark Easton’s BBC blog, meanwhile, takes a look at how the British government is looking to influence public behaviour in light of the Chief Scientist’s warning of a “perfect storm” of energy, food and water scarcity by 2030.

- Finally, as President Obama holidays on Martha’s Vineyard, the White House announces what he’ll be reading on the beach. Slate offers its take here.

• Uses 26% of the ice-free terrestrial surface for grazing, and 33% of the planet’s arable area for feedstock – in total, 70% of all agricultural land, and 30% of the land surface of the planet;
• Accounts for 70% of previously forested land in the Amazon (and that’s just the pasture – feedcrops are another big chunk again);
• Are responsible for 18% of greenhouse gas emissions in carbon dioxide equivalent – that’s larger than transport – and for 37% of methane emissions (23 times as potent as CO2 in its warming effect);
• Uses 8% of global human water use, mostly in irrigation for feedcrops, and is probably the single largest sectoral source of water pollution;
• Accounts for 20% of total terrestrial animal biomass – squeezing out space for other species and hence contributing massively to biodiversity loss, mainly through destroying habitats (30% of the land surface of the planet, remember)?

I love eating meat, but since I wrote The Feeding of the Nine Billion, I’ve been aiming to cut it out for 3 days a week.  Having re-read FAO’s report, I’m going to up that to four or five – as ways of reducing your carbon footprint and wider environmental impact go, this is a very low hassle,high impact option (especially if you have Sophie Grigson on your shelf).

Also, if you haven’t seen coverage of Tristram Stuart’s new book on food waste, then take a look…