It is well known that as people get richer, so do their diets. In the past, poor families might have eaten meat only on special occasions. As incomes rise, they begin to eat protein-rich foods on a daily basis. China is a good example. As incomes have climbed over the past couple of decades, consumption of meat, milk and poultry has soared (see the first chart below).

The fastest increase in food consumption tends to come as incomes rise from below US$1,000 per head to above US$3,000. After that, people begin to spend less of their extra income on food and more on fridges, televisions, cars and the like.

So to estimate future demand for food, analysts usually gauge consumers' purchasing power in terms of a country's gross national income per capita and how it is expected to develop over time.

But there's a big problem with this method. Gross national income per capita is a simple average, so the measure works only if income distribution is even, with half the population earning above the average and half below.

But in the real world there is massive income inequality, with the vast majority of the population earning considerably less than half the average income. (If that sounds strange, just imagine 50 journalists waiting for Li Ka-shing to give his biannual press conference. When the tycoon enters the room, the number of people present only goes up only by one, but their average income increases more than 10 times over.)

According to Nomura economist Rob Subbaraman, this skew means that 73 per cent of Asia's population - not 50 per cent - earn less than their national average. As a result, there are 700 million more people in the region on low incomes than most models assume. That means there will be a lot more extra food demand than the forecasts predict as incomes rise.

It's not just on the demand side that current forecasts are deficient. Expectations of future production may well overstate likely food supply.

Part of the problem is that growth in agricultural productivity has slowed in recent years. Investment in the sector has been lacklustre. Gains in cereal yields have slowed. And the average age of the agricultural workforce has increased sharply as the rural young have migrated to Asia's fast-growing cities. That means it will be hard for the region to ramp up food supply quickly in response to rising demand, which inevitably will mean higher prices.

There are other factors at work, too. Climate change and worsening water shortages are likely to push food prices higher. Meanwhile, rising oil prices have a big impact on food price inflation. That's not just because food production and distribution is a highly energy-intensive business, but also because higher oil prices push up the cost of hydrocarbon-based fertilisers and pesticides and encourage farmers to turn more land over to biofuel production.

On top of that, there is the risk that governments will respond to higher prices with protectionist measures like export bans, which in turn fuel speculation and food hoarding, which tend to exacerbate the price rises for everyone.

The effects are not equally distributed, however. To see who is likely to suffer most, Subbaraman and his colleagues have come up with the Nomura food vulnerability index. Based on a range of factors including income level, share of food in household consumption and the level of food imports relative to gross domestic product, this attempts to gauge which countries are most exposed to rising food prices.

The results are troubling. As the second chart below shows, Hong Kong is among the most vulnerable economies in Asia. Based on experience from 2007 to 2008, that means as food prices go up in the future we can expect higher inflation, slower economic growth and a deteriorating government fiscal balance. Chew on that.