Food Issues

News today from MSNBC:

A sharp rise in food prices has developed into a global crisis, U.N. Secretary-General Ban Ki-moon said Friday.

Ban said the U.N. and all members of the international community are very concerned, and immediate action is needed.

Ban’s statement came a day after the World Food Program appealed for hundreds of millions of dollars to cope with rising food prices that have sparked protests and food riots and led to bans on food exports in dozens of countries.

Josette Sheeran, the WFP’s executive director, said the U.N. agency is facing a 40 percent increase in the cost of food and requests for food aid from countries unable to cope with the rising prices.

And the Wall Street Journal says that buying and storing food may be a good investment move:

Stocking up on food may not replace your long-term investments, but it may make a sensible home for some of your shorter-term cash. Do the math. If you keep your standby cash in a money-market fund you'll be lucky to get a 2.5% interest rate. Even the best one-year certificate of deposit you can find is only going to pay you about 4.1%, according to Bankrate.com. And those yields are before tax.

Meanwhile the most recent government data shows food inflation for the average American household is now running at 4.5% a year.

And some prices are rising even more quickly. The latest data show cereal prices rising by more than 8% a year. Both flour and rice are up more than 13%. Milk, cheese, bananas and even peanut butter: They're all up by more than 10%. Eggs have rocketed up 30% in a year. Ground beef prices are up 4.8% and chicken by 5.4%.

Comments

[Ben @ Trees Full of Money]

Somethings might be ok to stockpile if you had the storage, but I'm not going to be stockpiling milk or eggs anytime soon!

Bottom line is inflation is eating away at more and more peoples' savings power. It's sad that we can actually loose buying power by saving our money.

[Kyle]

Ah yes, the law of unintended consequences strikes again. Remember when everybody thought Ethanol would be a great idea and the government started handing out subsidies? Big surprise! Good farm land started going for a premium and the price of crops skyrocketed since many farmers who once grew food switched to corn for ethanol production. We will never learn.

[Duncan]

By stockpiling food, aren't consumers exacerbating the current problem and raising prices all over the world. Food is quite affordable for Americans, but the inflation in food prices is really impacting poorer countries where food makes up a much larger portion of consumption. Stockpiling right now strikes me as a bit unethical.

[Kevin]

Duncan - I am guessing this is exactly why Sam's and Costco are limiting purchases of the large bags of rice. And Kyle is right - I don't think Ethanol is the answer. Although I guess it is a better use for corn that the high fructose corn syrup that is seemingly in everything nowadays.

[UncleL]

Save the world, UN should ban all trading of Oil, Food stuff like wheat, rice, grain in the stock market immediately. The trader is the one who is making all the money. All transaction should be done by fixing price and quantity is dertermine by UN or IMF. With this price fixing, consumer and grower will have a constant price to work on. It is better to risk the job of few thousand than life of billions of people in the world.

[Paul]

UncleL, are you serious? Haven't you read in history about what happens when prices are fixed? Think about our gasoline situation in the 70's when gas prices were fixed. No one had any incentive to produce so the supply dried up. Letting the market correct itself without government intervention may cause some short-term pain, but it sorts itself out much faster than when a governing body tries to make artificial pricing decisions.

[FS]

Kyle - while ethanol makes a convenient scapegoat, it is really the price of oil that has driven the cost of food (and all other material goods) through the roof in the US and around the world. After reading your comment, I did a little research... Just 25 percent of the US corn crop will become ethanol via processing the starch in the corn, AND the protein and other nutrients from this same corn will be fed to livestock (for milk, meat and eggs.) It is not the "either/or" situation some would like us to believe. US corn farmers produce food *AND* fuel from this corn, while the remaining 75% can be used for livestock feed, exported (mainly to be feed to livestock) and other food ingredients (less than 10% of total.) Don't buy the hype. OPEC doesn't want to give up any of their market to ethanol or any other alternative and will spend BILLIONS for PR to protect their auto fuel monopoly. Biofuels, like ethanol, are domestic, renewable fuels that lessen our dependence on foreign oil and help the environment and American economy.

[Matt]

UncleL: Only a gross ignorance of history could lead you to believe that price fixing is the answer, or that it's a tradeoff between the jobs and lives. Price fixing always leads to shortages. Price fixing on the scale you suggest would plunge the world into poverty, and millions would die as a result. Your approach didn't work out so well for the Chinese when Mao tried it either.

FS: Even if your stats are true, and even if it's isn't an either-or situation, there's a problem that still sticks around. If ethanol were such a great idea, the government wouldn't need to subsidize its production or mandate its use. If there's still a viable business for ethanol without the corporate welfare for Archer Daniels Midland and federal mandates, great. But the evidence suggests that petroleum is simply a better deal for consumers.