According to a recent report, worldwide food reserves are at their lowest in 35 years, so prices are likely to moveup for the foreseeable future. "Past shocks have quickly dissipated, but that's not likely to be the case this time," says Ghurkan a Rome-based FAO analyst. "Supply and demand have become unbalanced, and... can't be fixed quickly."

The world's food import bill will rise in 2007 to $745 billion, up 21% from last year, the FAO estimated in its biannual Food Outlook. In developing countries, costs will go up by a quarter to nearly $233 billion. The FAO says the price increases are a result of record oil prices, farmers switching out of cereals to grow biofuel crops, extreme weather and growing demand from countries like India and China. "The situation could deteriorate further in the coming months," the FAO report cautioned, "leading to a reduction in imports and consumption in many low-income food-deficit countries."

The bio-fuels are siginificantly responsible for increased food costs. Several countries like India have switched to bio-fuel crops in place of Rice, and the trend is expected to grow.