posted
How much press is this getting in the US. Food riots in Egypt, people eating dirt cakes in Haiti, protest all over Africa and in parts of south America.
Here in T&T, rising food prices is a major news item and every one is talking about it. The price of flour for example has risen 39% so far this year.
Yesterday, the UN's chief humanitarian officer warned that rising food prices could spark worldwide unrest and threaten political stability link.
One major driving factor for this is the US biofuels initiative that has driven the price of corn through the roof and lead many farmers to switch to corn from other crops.
So I'm curious. How much have food prices risen in your area over the past year? How much press is this getting in your area?
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posted
I think it's worth mentioning that food shortages have been the downfall of more than one culture.
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quote: For a number of reasons, rising shelf prices have yet to make a big impact in this country.
"We're not seeing the knock-on effect you would traditionally expect," said Craig Alexander, deputy chief economist at Toronto-Dominion Bank. "Commodity prices have soared, but it hasn't fed through to broad-based inflation."
Patricia Mohr, vice-president of economics at Bank of Nova Scotia, agrees. While current grain prices are "quite extraordinary," food price increases for Canadians "have been quite modest." What's more, she says, supermarket prices could fall back in the coming months as the U.S. economy slows.
...
The good news this time around, according to most economists, is that the blow dealt by higher grain prices is dampened by the high loonie.
"The rise in the Canadian dollar has actually led to lower inflation in Canada," Mr. Alexander said. "The Bank of Canada was initially worried about inflation, but the opposite has happened, and inflation fell below the BOC's core target."
Canadians can also thank Wal-Mart Stores Inc., whose move into grocery retailing has forced the supermarkets to keep their prices low to stay competitive.
posted
All the major news outlets are carrying at least side stories about various food shortage-related events around the world with regularity, though rarely major pieces.
Of course, there's about zero chance of the ethanol subsidies being repealed anytime soon, even though they're likely killing more people than many diseases at the moment and doing nothing in particular to improve sustainable energy usage.
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posted
Of all the disastrous policies promoted by the Bush administration, the ethanol subsidies may turn out to be the very worst.
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quote:Originally posted by The Rabbit: Of all the disastrous policies promoted by the Bush administration, the ethanol subsidies may turn out to be the very worst.
It just might. I knew this was to blame for rising food prices locally, but as I only have time to scan the top headlines on a daily basis I must admit that I wasn't aware of the global implications. It seems like something that should be in the top headlines -- definitely more important than the never-ending primary season -- but anyway...
I don't know exact statistics, but I do know that our household budgets for groceries has burst out of its breeches. We're spending almost double was we were 4.5 years ago when we got married and while I'm sure adding a toddler isn't helping that figure, he doesn't really eat all that much.
Looks like I should skip the top headlines tomorrow and read down a bit...
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posted
There are local stories about families who are paying more for their weekly groceries. I have noticed a slight uptick in the price of some things at the grocery store, but frankly the biggest sticker shock I've gotten personally is for a pizza. A large used to cost $8 at this one place I go to, now it's $13 and they've cancelled al coupons. When I asked them why, they said the price of cheese and flour has shot through the roof and they can't afford to keep the old prices. A friend of mine's mom works for the corporate offices of the same pizza place and she said they've been getting into some fights with distributors because they had price deals worked out for the flour ahead of time, but the price skyrocketed and they wanted to renegotiate the rates.
Food crop basead ethanol is having disastrous effects around the world, between the rising cost of food, the devastation of rainforests in South America and the overall reduction in the amount of food, it's at crisis levels. I can't remember the country, I want to say India, but one country recently banned some exports of food to keep home stockpiles high.
All this so that a very few agriconglomerates and biorefinery companies can cash in big on US subsidies.
Those subsidies should be going to non-food crop biofuels like cellulosic, which can include waste wood products, waste corn husks and the like, various kinds of grasses, and to the emerging algae farms, which are hundreds of times more efficient per acre than food based crops.
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posted
Today's paper had an article on how the skyrocketing price of the diesel fuel used in transport of certain staples has also lead to major increases in food price.
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posted
From the news stories it seems that the impact has been greatest in the world's poorer countries. I know that is at least partially because poor people spend a larger fraction of their total income on food so increases in food prices hit harder. But it also seems from the stories that the inflation rate for food is significantly higher right now in developing countries than it is in the developed world and particularly in the US.
I'm wondering if that impression reflects a real disparity or if its just an artifact of news reporting. I can think of a variety of reason why inflation rates might actually be higher in the developing world than they are in the US ranging from differences in the proportion of commodity foods to processed foods in peoples diets to farm and export policies.
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quote:Originally posted by Lyrhawn: ... I can't remember the country, I want to say India, but one country recently banned some exports of food to keep home stockpiles high.
Yep.
quote: Vietnam's government announced on Friday that it would cut rice exports by nearly a quarter this year. The government hoped that keeping more rice inside the country would hold down prices.
The same day, India effectively banned the export of all but the most expensive grades of rice. Egypt announced that it would impose a six-month ban on rice exports, starting April 1, and Cambodia banned all rice exports except by government agencies.
posted
Even if food prices go down, this is a sign of things to come.
With global climate change aversely affecting the growing areas and seasons of many crops, and with drought more severe and more prevelant in many areas, this could be the shape of things to come. People should take note, and prepare.
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posted
I wonder if the crazy corn prices will make it easier for me to find food that doesn't have high fructose corn syrup added. I'd be pretty happy about that.
But I'm not getting the connection between the issues here. Why would subsidies for ethanol in the US raise the price of rice in Asia?
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quote:I wonder if the crazy corn prices will make it easier for me to find food that doesn't have high fructose corn syrup added. I'd be pretty happy about that.
Nope. It'll just make it more expensive. Tariffs keep cheaper sugar out of the country that would be used instead of corn syrup. Countries like Brazil are eager to get access, but the farm lobby won't allow it.
quote: Why would subsidies for ethanol in the US raise the price of rice in Asia?
Subsidies for ethanol have caused soybeans and corn to be used increasingly for fuel production. As a result the price of those two things is shooting through the roof. A lot of farmers are switching from other food crops to corn and soybeans in an attempt to cash in on the high price of corn and soybeans. Taking into account less supply for food because more is being used for fuel, and the scarcity of other food crops as farmers switch to the new cash crops, and you get an overall scarcity of food of varying kinds, and as a result, higher prices worldwide. Also keep in mind the amount of food the US exports, the number of foodstuffs in the US that are tied to corn directly, and how globalization has led to the ripple effect of prices across countries.
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posted
I work for a vegetable seed company. Seed sales are up a bit this year (and also at other seed companies we know), we're speculating that part of it is folks trying to garden more because of higher food prices. (I've had some conversations with customers where they say as much.)
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posted
The Indian policy is an excellent example of an idiotic reaction. If they want to make sure the poor can have food without significantly reducing production (less market == less incentive to produce) and harming producers they should purchase food at going prices to provide to the poor (this could be done through a food stamp-esque program, among other things).
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posted
We're definitely feeling it here. Inflation last year (overall inflation, not just food) was at 19.something %. February's inflation was reported at 20%. I dunno how they get their numbers, but yeah, prices are climbing rapidly.
We have regular shortages of rice, milk powder, and other things that I can't recall off the top of my head. Rice has increased in price at least 40% in the last six months (it could be more - I haven't paid close enough attention). Coconuts are now Rs.37 per, while two years ago, they were Rs.15 per. Eggs, when I moved here five years ago, were Rs.40-45 per ten, but now are Rs.128 per ten. Milk powder prices have close to doubled in the last six months. Produce is, for the most part, somewhat stable. So far. Imported honey (the local stuff is really gross to me) has more than doubled in the last six months - say, about 2.2 times.
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posted
"...even with wheat at a robust $9 a bushel. Their own costs have increased, with diesel fuel and fertilizer up sharply... ...break-even last year was $4 a bushel. This summer it will be $6.20; the next crop, $7.75."
quote: Meteoric food and fuel prices, a slumping dollar, the demand for biofuels and a string of poor harvests have combined to abruptly multiply WFP's operating costs, even as needs increase. ...the number of people needing help is surging dramatically. It is what WFP Executive Director Josette Sheeran calls "a perfect storm" hitting the world's hungry.
Thanks, aspectre. That makes a lot more sense to me now. I figured it had to be more than just corn prices since the USDA FAQ made such a big deal about our wheat exports and corn didn't even make the list.
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posted
Digby had a good post on this at her blog yesterday.
What shocked me was that rice has doubled in price in the last year, and is now setting price records daily. That's really alarming. Bloomberg quote via Digby:
quote: Rice climbed to a record for a fourth day as the Philippines, the biggest importer, announced plans to buy 1 million tons and some of the world's largest exporters cut sales to ensure they can feed their own people.
Rice, the staple food for half the world, rose as much as 2.9 percent to $21.60 per 100 pounds in Chicago, before paring gains. The price has doubled in the past year. Philippine President Gloria Arroyo announced two rice tenders today and pledged to crack down on hoarding. Anyone found guilty of "stealing rice from the people'' will be jailed, she said.
"We're in for a tough time,'' Roland Jansen, chief executive officer of Pfaffikon, Switzerland-based Mother Earth Investments AG, said in an interview with Bloomberg Television from Zurich today. Unless prices decline, "you will have huge problems of daily nutrition for half the planet.'' Mother Earth holds about 4 percent of its $100 million funds in the grain http://www.bloomberg.com/apps/news?pid=20601087&sid=ahRifIz3hjh0&refer=home
quote:I figured it had to be more than just corn prices since the USDA FAQ made such a big deal about our wheat exports and corn didn't even make the list.
The two are intimately connect. Because of ethanol subsidies, many farmers have switched from growing wheat to growing corn. What's more, corn and wheat are somewhat interchangeable in processed foods and diet. (i.e. if the price of corn starch soars, manufacturers may switch to wheat starch instead. If the price of corn tortillas soars, consumer demand for flour tortillas will rise.)
Its also important to understand historic factors. Over the past 30 years, US farm subsidies have had the duel effect of stimulating overproduction and keeping commodities prices below production costs. So the US has been exporting large quantities of grain at artificially low prices which has driven small farmers around the world out of business.
Corporate mergers, trade agreements and low fuel costs lead to a food distribution system that makes it almost impossible for people in many parts of the world to eat locally grown foods. In the US its estimated food travels on average over 1500 miles from farm to dinner table. That makes food prices more sensitive to the rising cost of fuel. Add to that the fact that large corporate farms tend to be more energy intensive than smaller traditional farms, and you get a food production and distribution system that is highly energy inefficient and therefore overly sensitive to changes in fuel prices.
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posted
Its also important to note that food is a fairly inelastic market, which means that a small decline in availability can result in a disproportionately large rise in food prices.
One of the interesting features of the current food crisis is that it isn't characterized by a lack of food. Food is available on the shelves in all the places where food riots are going on. It is simply become too expensive for many people to buy.
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posted
Weren't farm subsidies originally designed to help farmers because the price of food was too low? They paid the farmers not to grow certain things so that the price of food would go up a bit which would help out struggling farmers (back in the day) and keep them afloat. Granted that has become somewhat useless now that food prices for many crops are at their highest levels ever and agriconglomerates are the chief getters of these subsidies, but I still thought that the main purpose of subsidies wasn't so that they could sell the food at artificially low prices, but so they could afford NOT to grow some things, thereby driving the price up. It's one of the more commonly used arguments I hear to try and argue for the end of farming subsidies.
What would happen next year if all of a sudden the Farm Bill magically included no money for subsidies? I guess that's more of an open question that anyone can feel free to jump in on. Wouldn't there be a drop in the price, and wouldn't farmers start growing more crops to make up for the drop?
Also keep in mind that the spike in the price of many commodities is due to a great many things being overvauled at the moment, the most pertinent to this discussion of which is oil. It'll come back down once people stop dumping dollars into oil and other natural resource type things in an attempt to keep their money safe, but it'll be a weird ride until that happens.
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That's certainly the case here - not that we have riots, but that a lot of people can't afford as much as they used to.
There is an entire segment of the population here that, before the outrageous inflation began, were already going to the markets and shops and buying two or three cups of raw rice, a half cup of dal, one onion, four carrots, and so on each day. They'd daily buy the amount of food they would cook that day. These are people who are paid a daily wage or are self-employed with jobs that bring them a small but steady amount of income. Like trishaw drivers, bicycle or motorcycle fish mongers, door to door vegetable sellers, street cleaners, some house servants, yard boys, beggars, and so on. They already don't have the money to buy their food even a week in advance.
Now the cost of living has risen dramatically. It's not just food, but also fuel - petrol for vehicles, gas for stoves, and so on. The gas for our stoves has doubled in price in less than a year, I think. In the last five years, it's quadrupled (ish. Or pretty close to that.)
But wages have not increased at anywhere close to that same rate. For some, yes, but not for all.
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quote:Weren't farm subsidies originally designed to help farmers because the price of food was too low? They paid the farmers not to grow certain things so that the price of food would go up a bit which would help out struggling farmers (back in the day) and keep them afloat.
The short answer to that question is "no". From the time of FDR until the early 70s, US farm subsidies operated as a no interest loan program. If commodity prices were lower that production costs, a farm could get a no interest loan from the government on his crop and then wait until prices rose to sell the crop and pay back the loan. The effect of that policy was to insure a close relationship between the farmers production costa and to keep the supply relatively stable. In the early 70s a combination of factors (which are surprisingly similar to the current situation) lead to skyrocketing food prices in the US. People were protesting and so the farm policy was radically altered.
Since the 1970s the farm policy guarantees a minimum profit on the sale of certain commodities. If market prices are below the break even point, the government pays the farmer the difference. From the time that this change was made up to a few years ago when the US biofuels program started, the market price for corn was always lower than the break even point. What that meant to farmers was that their profitability was perpetually linked to government subsidies and that their profit margin per bushel was stuck at the minimum level guaranteed by the program. The only way to make end meet was to grow more bushels of corn. This policy had the combined effect of keeping commodity food prices unrealistically low, keeping production very high and driving small farmers out of business.
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posted
New Zealand went cold turkey off of subsidies some time ago. See here -- it looks to be working out pretty well.
It seems like a lot of the subsidy policy in the U.S. was designed to keep other countries dependent on American food imports, and the entire food system (at least in Anglo-North America) was built around the concept of cheap fuel. Here in Florida, the tomatoes in the grocery store are emblazoned with "Product of Canada" labels while most of the land around here is dedicated to beef ranching.
Prices have crept up, the most dramatic here was the steep climb milk went through last summer. It's been enough to persuade us to start building up our food storage.
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posted
Rabbit: that's not entirely true, the no lack of food bit For instance, Mugabe has managed to drive most of the food out of stores. Also, even where there's 'food on the shelves', that's just a statement of marginal stock. The amount that would be demanded at even a slightly lower price would, in many locations, obliterate the amounts stores are using to keep stock readily available at current prices.
The stated purpose of farm subsidies has changed repeatedly over the years. The (blatantly obvious) real purpose has been to buy votes and avoid being slammed as the anti-farmer candidate. There is no rational public policy argument for the farm bill as it is currently implemented, and that's been true for decades.
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posted
Rabbit, a quick Google search and a little reading says that the uses of subsidies are generally multipurpose, but that paying farmers when prices are low has been probably the largest part of it. But this is the sort of thing I was referring to:
quote: Upon his inauguration as president in 1933, President Franklin D. Roosevelt moved national agricultural policy far beyond the Hoover initiative. Roosevelt proposed, and Congress approved, laws designed to raise farm prices by limiting production. The government also adopted a system of price supports that guaranteed farmers a "parity" price roughly equal to what prices should be during favorable market times. In years of overproduction, when crop prices fell below the parity level, the government agreed to buy the excess.
...................
But as farm production climbed higher and higher through the 1950s, 1960s, and 1970s, the cost of the government price support system rose dramatically. Politicians from non-farm states questioned the wisdom of encouraging farmers to produce more when there was already enough -- especially when surpluses were depressing prices and thereby requiring greater government assistance.
The government tried a new tack. In 1973, U.S. farmers began receiving assistance in the form of federal "deficiency" payments, which were designed to work like the parity price system. To receive these payments, farmers had to remove some of their land from production, thereby helping to keep market prices up. A new Payment-in-Kind program, begun in the early 1980s with the goal of reducing costly government stocks of grains, rice, and cotton, and strengthening market prices, idled about 25 percent of cropland.
Price supports and deficiency payments applied only to certain basic commodities such as grains, rice, and cotton. Many other producers were not subsidized. A few crops, such as lemons and oranges, were subject to overt marketing restrictions. Under so-called marketing orders, the amount of a crop that a grower could market as fresh was limited week by week. By restricting sales, such orders were intended to increase the prices that farmers received.
And crap, I accidentially just closed out the page that I'm referring to. It's a government website about labor and farming. Let me see if I can find it again.
And I agree with fugu. At the very least, politically the sort of thing he is referring to is exactly why the massively bloated Farm Bill will never die. Too much power in the farm belt, plus too much money in the argibusinesses, plus how easily it is to play politics with the farmers, to say nothing of the fact that no presidential candidate can advocate slashing subsidies and still win the Iowa caucus has kept them in force.
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And I never said that their wasn't a shortage of food. I said that this wasn't the primary characteristic of the current crisis and I noted the relationship between prices and supplies.
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posted
Lyrhawn, Different policies applied to different agricultural products as indicated in your links. My comments applied only to commodities, primarily grains and beans. I did a bunch of research on this last year for the energy class I taught. I will look for references for you.
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posted
Interesting, and thanks! I must've missed the part on which policies applied to which products. I'm not very well versed in 20th century agricultural policy, but I'm interested in reading more on the subject if you have something relatively accessible on hand.
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posted
I once heard that some large number (40%?) of American crops go to making alcoholic beverages. Has anyone heard that?
To me, this is kind of like the population bomb argument. I'll worry about three being too many kids when there is no longer a pet food aisle at the store.
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posted
You just reminded me of another shortage! There's been no cat food for the last three or four months. We've switched my cat over to fish and rice.
So, not as important as, say, rice or milk powder.
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Food prices haven't risen much -- a little, which is more than usual -- but I did hear about rising prices elsewhere on NPR yesterday.
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I expect that somewhere, Amelia Earhart is delighted with all of the new books and cooking equipment she has recently acquired.
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quote:And I agree with fugu. At the very least, politically the sort of thing he is referring to is exactly why the massively bloated Farm Bill will never die. Too much power in the farm belt, plus too much money in the argibusinesses, plus how easily it is to play politics with the farmers, to say nothing of the fact that no presidential candidate can advocate slashing subsidies and still win the Iowa caucus has kept them in force.
Finally, someone has highlighted a benefit of the Iowa caucus for me.
I don't know how much of a difference the farm bill makes to the economy of northern Kansas. I doubt any of ya'll know, either. Speaking as a native and current inhabitant, I truly hope I never have to find out. My guess would be on the negative side.
In other news, the ethanol refinery nearby has reportedly (from the rumor mill) gone belly up because of a frightened investor. Apparently, the ethanol market isn't behaving properly. There was another refinery in this area that never got built, either, due to the same reason. Market glut, anyone?
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posted
There's massive, massive bloat and overspeculation on the ethanol market right now. Too many unsustainable refineries were built or planned to be built that were never going to make it in the long term.
I suspect as technologies come out that cheapen the process and make it more efficient, you'll see things settle down, the market will settle, the best refineries will succeed and the ones that were never going to cut it anyways will fold. Bit it'll take 10 years, and it'll depend on how the government reacts. Refineries are also closing because of a lack of corn to feed into them to make the fuel, also due to the fact that there's just too many refineries.
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quote:Originally posted by Noemon: I expect that somewhere, Amelia Earhart is delighted with all of the new books and cooking equipment she has recently acquired.
It took me a second, but Posts: 6246 | Registered: Aug 2004
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quote:I expect that somewhere, Amelia Earhart is delighted with all of the new books and cooking equipment she has recently acquired.
I'm personally expecting to see my stuff start showing up in lost episodes. I wonder how Kate will look in my red silk dress.
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quote:I once heard that some large number (40%?) of American crops go to making alcoholic beverages. Has anyone heard that?
The idea seems absolutely ridiculous to me. Some googling didn't turn up anything talking about percentage of crops used, but I did find sales numbers for the 90s in how much Americans spent on food and alcohol. These numbers include domestic production and imports, and don't include exports, but I think they still show that a percentage like that is highly unlikely. In 1999 Americans spent $92 billion on alcohol and $756 billion on food. That includes money spent in restaurants, where a glass of wine frequently costs 75% of what the entire bottle would cost you at a liquor store.
posted
The current global food crisis, makes it very clear (at least to me) how truly delusional the developed world is in its approach to peak oil and climate change.
I keep thinking about Swartzeneggers fleet of Hummers he's trying to convert to fuel cells and Bush Sr. famous statement that "The American Lifestyle is not negotiable". People seem primarily concerned about whether or not they will be able to continue to get the latest plasma TV or whether fluorescent bulbs will emit the right color light.
It makes me want to scream. Our life style is not sustainable!!! If we don't start negotiating we are apt to loose the most important things. Who will care about getting the latest iPod if they can't afford to eat. We need to get serious about identifying what parts of our lifestyle are most important (like food) and start planning so that we don't loose those.
quote: Things which matter most must never be at the mercy of things which matter least.
posted
Isn't that fairly self-correcting though? People who have to make a choice between an iPod and food will choose food. If they don't have to make the choice, they won't.
Are we really approaching peak oil? Haven't various experts been saying that for 20 years? I know that oil supplies aren't limitless, but we aren't exactly on fumes yet either.
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quote:Originally posted by MightyCow: People who have to make a choice between an iPod and food will choose food. If they don't have to make the choice, they won't.
But the choice is between them having an ipod and someone else having food.
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posted
It isn't at all clear that is or will be the choice, though (and I'm not taking 'iPod' simplistically).
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quote:Are we really approaching peak oil? Haven't various experts been saying that for 20 years? I know that oil supplies aren't limitless, but we aren't exactly on fumes yet either.
Peak oil doesn't mean we are running on fumes. It simply means that oil production has reached its maximum and will begin to decline. Its not like we will be able to produce oil at whatever rate we want it until the last drop is gone and then suddenly -- boom no more oil. As we use up more and more of the earths petroleum, it gets harder and harder to find and harder and harder to get. As a result, we reach a point at which we simply can't get the oil out of the ground as fast as people want to use it.
We are now in a situation where the global demand for oil in increasing faster than production has been able to increase. That's why prices have been climbing for the past 7 years.
All though it is highly controversial, there is a growing belief that we are now at that peak. World oil production has reached a plateau over the past 4 - 5 years. Its still possible that new discoveries or technologies could lead to an increase in the future, but it is more likely that production will begin declining slowly. We won't really know whether we are really at the peak until the peak is past.
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posted
An interesting effect of my time in New Zealand- I was mostly subsisting on American news from the Internet, with occasional bits from the BBC and Stratos (an apparently German news agency that offers a channel to some NZ markets)... I didn't really start hearing about food shortages (specifically, rice shortages) until I spent some time in Fiji. But then, New Zealand is a lot more self-sufficient than poor Fiji.
Regarding the "x% of American crops go to alcoholic beverages", I can't confirm or deny, but I can note anecdotally that a friend who bartends at a brewpub notes they've had to stop carrying hefeweitzen because the price of hops has recently skyrocketed.
As far as
quote:Originally posted by The Rabbit: Of all the disastrous policies promoted by the Bush administration, the ethanol subsidies may turn out to be the very worst.
I agree that while ethanol continues to be produced largely of food crops, the policy may be very damaging indeed; however, I think unlike some of our dear president's policies, this one might not be as difficult to reverse.
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