For a foodie website that guides its gourmet readers every week on new cuisines and trends in the world of food and drink a story on rising food costs seems out of place ...or is it? Rising food costs have created havoc amongst the growing middle class. Reports differ as to the root cause of this seemingly unstoppable rise.

There are many factors at play here according to reports in The Wall Street Journal: The poor monsoon that keeps grain prices at elevated levels. A poor onion crop that drove the price of this staple sky high. But the sole offender is probably inept government policy and execution of plans.

Add to this a policy adopted by traders who are hoarding and trying to game the market. They can do so for the simple reason that supply constraints persist across the agricultural chain.

Even when food inflation was high, there were grains rotting in the fields because storage is so bad.

Agricultural productivity remains appallingly low, yet the government is making it difficult to bring in the changes that would dramatically increase it, such as land reform, the expansion of agri-business, or improved market access that cuts down on wastage suggest experts.

The government, ironically, may be compounding the problem with its social welfare policies. The National Rural Employment Guarantee Act, which promises 100 rupees a day for rural workers for 100 days a year, is little more than a dole. It could be a driver of more productive agriculture but there are few signs of that so far.

This scheme experts say, pays more than many agricultural jobs, driving up the cost that agriculturalists have to pay their workers. It also puts more money in the hands of workers-men and women-who can then improve their dietary habits slightly. So, too, can those at the bottom of the socio-economic pyramid who have seen some benefit from the nation's economic growth. That increases demand for food that the supply struggles to meet, so prices rise.

The World Bank says global food prices have hit "dangerous levels" after jumping 29 per cent overall in the past year. It estimates costlier maize, wheat and oil have pushed 44 million people into extreme poverty since June.

The UN Food and Agriculture Organization says food costs have reached a historic high but recent good harvests are staving off the kind of food emergency felt in 2008, when shortages and higher prices caused riots in poor nations.
According to Knight Frank Research, The Indian economy finally seems to be cooling off in terms of prices with the latest month's inflation being reported at the lowest level since the last two years. Wholesale Price Index (WPI) growth for the month of January 2012 stands at 6.6%, down from 7.5% in the previous month. Additionally, WPI growth of food articles was reported at -0.5% for the latest month implying that food prices have finally started falling. Is the worst over? Watch this space.