Joanna Blythman on the food crisis

THE sums just don't add up. There's a world food supply crisis, the cost of a basket of groceries has shot up by between 10% and 12.5%, yet our supermarkets are recording healthy profits - Tesco's profits last year, for instance, showed a 11.8% rise.

Meanwhile, farmers - the people who produce our food, say that they are being paid less than they were years ago. Many are selling meat and milk at below the cost of production. Their situation is pretty desperate. It's no coincidence the homepages of farming websites flag up the 24-hour helpline numbers for the Samaritans and the Farm Crisis Network. Suicide among farmers is at record rates.

When pressed by John Humphrys on the Today programme about what the government was doing to control soaring retail food prices, deputy prime minister Harriet Harman said that she "expects the supermarkets to play their part". Ominous words. Farmers will wince, because they understand the sub-text.

Subsequent administrations have given the nod to supermarkets to squeeze farmers on price in order to keep food inflation down and that pressure can only get worse. Asda Wal-Mart CEO, Andy Bond, recently said he intends to be "assertive" and "aggressive" with suppliers. Go right ahead Andy, but there won't be many farmers left.

So there's the mental arithmetic problem. If the farmer gets less, the consumer pays more and the supermarket makes more, where's all the profit in the food chain going?

An interesting insight into this murky maths was provided this week by EU agriculture commissioner, Mariann Fischer Boel. She says that only about two-thirds of the rise in food prices we have seen in Europe can be attributed to increases in the cost of ingredients. "Energy, transport and labour costs have risen, but it is possible that somewhere along the food chain someone may be doing well out of this," she adds.

She has released figures showing that the cost of many grocery staples has gone up by more than the value of basic commodities used to make them. Bread, for example, increased 10% between February 2007 and 2008, but the near-doubling of the price of wheat should have led to only a 3% rise.

It seems our retailers are doing very nicely out of the global food crisis, thank you very much, and so are the global agri-business firms, traders and speculators currently raking in fabulous profits. Hungry people are out on the streets from Egypt to Haiti to protest at the rocketing cost of staples, yet Cargill, the world's biggest grain trader, has achieved an 86% increase in profits from commodity trading in the first quarter of this year alone. Meanwhile Bunge, another huge food trader, reported a 77% increase in profits during the last quarter of last year. ADM, the second largest grain trader in the world, registered a 67% increase in profits in 2007.

Farmers the world over yearn for stable, reliable prices for the food they produce. But stock market traders? My, how they love volatility. Buying and selling? It's how they make their money. That's why investment funds, escaping from sliding stock markets and the credit crunch, are having a bonanza on the commodity markets.

But while they have elevated food speculation to an art form, they are driving food out of reach of poor countries like Bangladesh, Cameroon and the Philippines.

In rich countries like ours, the rising cost of food is not yet critical. Certainly, our poorest citizens already feel the pinch. You can turn off the heater but you still have to eat, and a 60% increase in the cost of a bag of pasta is significant. But the worse scenario for most affluent people is hardly grave - less to spend on a handbag or new trainers, perhaps.

However, globally, the situation is acute. A new UN taskforce now warns that we face "an unprecedented challenge of global proportions that has become a crisis for the world's most vulnerable".

Head of the taskforce Sir John Holmes, has likened it to "a silent, rolling tsunami", more insidious even than the classic famines we have seen in countries such as Ethiopia. The UN World Food Programme estimates that recent food price rises mean an additional 100 million people can no longer afford to eat adequately.

The IMF and the World Bank pushed countries to dismantle all forms of protection for their local farmers and to open up their markets to global agribusiness and subsidised food from rich countries. Like chiselling snake oil salesmen, they said that a liberalised market would provide the most efficient system for producing and distributing food.

Some 70% of developing countries listened to them and changed from exporters of food into importers. Now they can't afford to buy food because traders' asking prices are too high.

Harvests blighted by climate change, combined with a soaring global population, make it ever harder for the planet to feed itself.

But when food is no longer just something that nourishes people and provides them with secure livelihoods, and becomes a commodity for corporate speculation and bargaining, then that task becomes impossible.