What's driving World's food price increase?

Here is a good report on this issue, published by two Purdue University Economists. The report identifies three key reasons:
- Changes in the production and supply of key commodities
- Depreciating Dollar
- Growth in the production of biofuels

Interestingly, the report does not put direct blame on the rising demand from India and China for the increase in price of food grains. However, the report says that China's demand for oil is driving prices in oil and that indirectly drives prices of other commodities and food grains.

Both India and China are pretty self-sufficient in the production of most food grains. If you are interested in better understanding of this issue, please check out Ajay Shah's blog post. I do not agree with him on all the points but he has some good analysis. The main issue I have with his analysis is that it rests on the price signaling mechanism for balancing supply and demand in the market. However, such price signaling mechanism does not really work in Indian and Chinese context because the govt. controls the price for food grains. And this is what the above reports also implies.