Archive for February, 2012

Official quarters claim growing affluence is leading to growing demand for protein-rich foods, in turn setting off price rise. But the latest official data reveal that protein consumption is declining, not rising.

Establishment economists have been busy trying to construct a theory to explain the steep rise in food prices in recent years. The current favourite theory in official circles is that it is the result of growing prosperity. The author of this theory is Dr Subir Gokarn, deputy governor of the Reserve Bank of India (RBI). In his paper “The Price of Protein,” he traces the rise in the overall level of food prices to the rise in demand for protein-rich foods; “as levels of affluence increase, the demand for proteins is bound to increase overall.”[1]

Examining the pattern of consumption of different income levels of the population, Gokarn finds that the composition of the diet changes significantly at a particular level of income – people begin to eat more protein-rich food. So, Gokarn argues, as an increasing share of India’s population crosses a particular threshold income, the demand for protein rich foods too would rise.[2] (George Bush would be happy with this theory: he famously attributed global food inflation to billions of Chinese and Indians eating more than in the past.)
(more…)

Read Full Post »