Where food and energy compete

Since 2007, global food and energy prices have been increasing steeply, hitting economies reliant on energy and food imports with great force like a “silent tsunami”. Rising food costs have led to social unrest in some 30 countries. Food and energy security is more closely connected with political stability than ever before. How to balance food security and energy needs is becoming a burning topic in the international community. China, India and other Asian countries have responded promptly to the global food and energy crisis with a number of measures, including export bans, price intervention and subsidies. However, despite the short-term effect of reducing inflationary pressure by export and price intervention, very little seems to slow the momentum of rising prices. In fact, the intervention would probably distort subtle price adjustments and mislead resource allocations, which could in turn be the potential cause for a real crisis at a later stage.