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Published on April 18, 2008

Aditya Chakrabortty

The French queen, who famously said her subjects eat cake when told they had no bread, has gone down in popular history as callous and fully deserving of the guillotine.

Last year, however, farmers in Pennsylvania began following her advice.

Since standard animal feed had become too dear, they started giving their pigs and cows chocolate - and banana chips, cashews, raisins, any of which were cheaper than the run-of the-mill corn and beans.

In doing so, one farmer said he saved 10 per cent on feed costs.

From hogs in the US to shoppers in the UK, we are all being struck by higher food costs. Staples such as bread, milk and other foodstuffs consumers think of as basic are subject to a complex range of pressures stretching from London to China and from America to Australia.

The price of that daily loaf fluctuates to what happens on the Minneapolis Grain Exchange to the outlook for the Indian economy.

What all that means is that if you think bread is already pricey, think again: It could go higher.

Here in the UK, a loaf of Hovis Classic White, that staple of school lunchboxes, now goes for around £1 (Bt62), already far above what it fetched a year ago.

But the company behind Hovis, Premier Foods, warned last month that it would have to raise prices again. Premier also admitted that its profits from bread sales had nearly halved, thanks to what it termed "an exceptional level of cost inflation".

Wheat prices, which were already creeping up, have doubled in the past year.

Some types of wheat have risen more than that: spring wheat has shot up from US$220 (Bt6,800) a tonne last April to $578 now.

The most immediate reason for the spike is poor harvests. There was barely any rain in Australia last year and the year before that, so stockpiles of wheat have hit a 30-year low.

Another factor is more recent: biofuels. As of April 15, 2.5 per cent of all petrol and diesel sold in the UK must be made from plants.

That will rise by 2010 to 5.75 per cent. This is part of the government's push to combat climate change.

In comparison with fossil fuels, energy derived from plants is touted as cleaner and greener. The problem is that they take up land and crops that might otherwise feed people.

America is easily the biggest country on board, as it looks to reduce demand for petrol. The result has been that 20 per cent of the American maize crop has gone not into feeding people, but fuelling machines.

The precise effect of the biofuel craze on food prices is controversial; some experts claim it has had minimal impact.

But Amy Reynolds, senior economist at the International Grains Council, said at the beginning of the decade only 18 million tonnes of grain was used for industrial purposes. This year 100 million tonnes will go towards biofuels and other industrial purposes.

To bring down food prices, halting to biofuels would probably not reverse the trend.

One reason may simply be that more people are eating more - especially in increasingly prosperous countries such as China and India.

In 1985, for instance, the average Chinese ate 20kg of meat a year. That has gone up to 50kg a year.

When you consider that it takes 10kg of feed to make 1kg of beef, the effects of these billions of new consumers is dramatic.

Still, once you strip out inflation, what we paid for wheat dropped by over 80 per cent between 1973 and 2000.

Even now, after the record rises for wheat prices, what we pay is considered below the levels of the 70s.

In an ideal world, we would simply adjust for the new wealth of the east by adjusting our spending: eat less meat, or not throw away leftovers.

But this transition is unlikely to be so smooth.

Dominique Strauss-Kahn, managing director of the International Monetary Fund, said the food crisis posed questions about whether governments in some countries would survive.

"As we know, sometimes those questions lead to war," he said.

Aditya Chakrabortty is economics leader writer for the Guardian UK.