Is anyone aware of any other contributing factor for the rising food prices other than the Fed’s easy credit inflationary policies of the last 6 years?
http://money.cnn.com/2007/12/19/news/companies/food/index.htm?postversion=2007122009
Higher fuel costs, ethanol subsidies, the weather.
Food prices are going up in many countries due to the lunatic US ethanol program. Corn is used as an animal feed and as an ingredient in many foods. The Ethanol program pits our energy demands against our food demands.
Now if Iowa didn’t hold the first election of the primary season every four years…
I can see how that would raise the price of corn, but how does that correlate with the crazy rise in wheat prices and other staples?
The other posters here are right. The misguided ethanol craze is contributing to the problem, and no returns from this malinvestment have been forthcoming.
When corn is used to create ethanol, it can’t be used to feed as many animals. It can’t be inserted into nearly every food item we buy (check the ingredients of food in your house for high fructose corn syrup – it’s in everything). Well, it can, but it costs more to do it as the good becomes less readily available.
Add in rising populations worldwide who also need food and energy, and the artificial scarcity of corn contributes to rising prices.
Also, ethanol isn’t donig anything to lower energy costs. We use about as much energy growing the corn, irrigating the fields, spraying oil-based pesticides, harvesting the corn, and converting it to ethanol as we finally get out of it. It’s just not energy-intensive enough to replace conventional oil.
The subsidies disappear down the black whole of negative energy returns.
And, as oil prices have gone up this year, our 3,000 mile Caesar salads became more expensive. It’ll take more dollars to get the same amount of strawberries grown in Chile, packaged in Bolivia, and shipped to the grocery store.
All good points. Thanks.
Farmers grow more corn and less other crops…
long term, industrialization of asia will mean richer diets, more animal protein implying higher demand for feed grains. on the supply side, water for crop irrigation is under intense pressure, and likely to cost more.
nevertheless, i think the other posts are right about ethanol and monetary growth being the primary drivers since 2000
The rise in one agricultural good will tend to rise all other agricultural goods too, just in the same way any price increase in one important market will increase prices in others.
Though that probably does not explain everything, it’s a factor that contributes, no doubt.
Substitution.
I don’t think that the weather caused this. This is equivalent to Stalin, Mao Zedong and socialist Deng Xiaopeng who claimed that famine was 30% weather.
Scarcity. Stocks are very low. Dollar inflation has a role to play in this, since Asian importers can better afford dollar denominated wheat.
But mostly we can trace the increases to inflation. “…corn and wheat prices [are] at relatively low levels historically…they would need to rise 135 per cent and 60 per cent respectively to reach their 1996 highs in inflation adjusted terms.”