Why Food Prices Are Skyrocketing

What's going on with food? Rice price has skyrocketed around the world, leading to riots in third world countries like Bangladesh, Haiti, Egypt, and the Philippines. Two large warehouse chains in the US (Costco and Sam's Club) have gone so far as to put a quota on how many bags of rice and flours you can buy.

Overall, the price of grocery has jumped tremendously (if you're the grocery shopper of the family, then you'd know what I'm talking about):

Many analysts expect consumers to keep paying more for food. Wholesale food prices, an indicator of where supermarket prices are headed, rose last month at the fastest rate since 2003, with egg prices jumping 60 percent from a year ago, pasta products 30 percent, and fruits and vegetables 20 percent, according to the Labor Department.

The culprit? The skyrocketing price of oil (obvious) and corn (now not a lot of people actually know about it):

Several factors contribute to higher food prices, analysts say, but none more than record prices for oil, which last week closed above $105 a barrel. Oil is not only driving up production and transportation costs, but also adding to demand for corn and soybeans, used to make alternative fuels such as ethanol and biodiesel.

As a result, corn prices have more than doubled in commodity markets over two years, and soybeans nearly tripled, according to DTN, a commodities analysis firm in Omaha. Meanwhile, with poor harvests in major wheat-producing regions, wheat prices have more than tripled.

These crops have a profound impact on food prices because they form foundations for many products, including oils, sweeteners, and flour. Corn, for example, is a key ingredient in livestock feed. When the price of corn rises, so does the price of feed, and ultimately, so do the prices of meat, poultry, and eggs.

Robert Gavin of The Boston Globe has more: Link


there's a lot i could easily say about all of this... but of course none of it would make the economy any stronger. the sad part is that even though all this stuff is happening, people will not change their habits because they expect the government to step in and take care of the problem. i don't think it's understood that people make society, society does not make people.
Abusive comment hidden. (Show it anyway.)
We have to remember that the producers of grains, milk, etc. need more money to actually produce their crops because of the rice in the price of fuel. But most of the blame is on the companies that process the grain, etc. - they are benefiting more than the producer or even seller. I think we would be better off if we could buy directly from farmers milk, eggs, flour. Or we each grew our own food...
Abusive comment hidden. (Show it anyway.)
MoonCake -

The problem is that the government is already interfering in food prices, on behalf of farmers. In America, there is a legally mandated price floor for milk, and corn/grain farmers get money from the government.
Abusive comment hidden. (Show it anyway.)
The problem is that the governement didn't wanted to create more corn field to meet the demand of corn at the time biodiesel was introduced as the savior against global warming.

It's all part of the big oil company plans, mock alternative fuel source and if it doesn't work just make things a lot more harder for them using a lot of money and corrupt politicians.

They could have planned things better but they didn't because then they would have trouble selling oil to the world.
Abusive comment hidden. (Show it anyway.)
>I heard that a gallon of milk is more expensive than a gallon of gas now…

It is in Chicago, but not by much. $4.29 a gallon for milk. $4.08 for a gallon of gas.
Abusive comment hidden. (Show it anyway.)
Pay attention to what is going on in the news:

Farmers who used to grow wheat or rice or corn for food/feed now grow corn for making ethanol, exclusively.

People will now starve, worldwide, just so the farmers can make maximum profit, because they haven't been doing too well, financially. It is not the farmers fault.

Meanwhile, the oil companies will continue to make outrageous profits.

Keep your ears to the wind, a worldwide hunger crisis is coming, just so people do not have to depend on foreign oil.

Wait for it.
Abusive comment hidden. (Show it anyway.)
Probly has more to do with the value of the dollar falling then the cost of oil. "The dollar is now down 50 percent against the euro since October 2000" I think a fix for all of this is a 1% tax on all credit transactions, and just take that 1% out of circulation. The dollar is worth less cause there printing more to pay for this war.
Abusive comment hidden. (Show it anyway.)
There are still ways of saving on food bills in America today. I don't know if these stores exist everywhere, but in central Pennsylvania, there are several local grocery liquidators, with names like "Surplus Outlet". You can buy slightly out-of-date groceries, dented cans, closeouts, last year's model of whatever gadget, etc... all at significantly reduced prices, from 50% to 90% or more off! Many of these stored have cheap lunchmeat, almost-out-of-date bread, local milk, and other staples, at lower prices than the grocery chains.

Normally, this stuff is probably thrown away or at most donated to charities. Local liquidation stores buy it for pennies on the dollar, and sell it cheap. You can walk away with a full grocery cart for around $60. I've yet to run into any problems with food being spoiled or bad. It's probably the best way people in this economically-depressed area can get more for their grocery money.

There's no way anyone with a lower-to-middle class income can buy groceries, clothing, or other items at retail prices anymore. That's why we watch for sales and shop at the discount, surplus, and thrift stores such as Salvation Army, Goodwill, Big Lots, etc. There's always Farmers' Markets as well.
Abusive comment hidden. (Show it anyway.)
The problems here are not with the "big bad oil companies making record profits while sticking it to the little guy" There really is no such thing as an oil tycoon. All of the major oil companies are publicly traded companies and the majority of shares within every company are the major investment firms representing over 70 percent holdings by average joe's like you or me in the form of 401k's and IRA's. Take some time and review your portfolio and you might be surprised to find that you in fact are the partial owner of these evil "big oil" companies.

The lack of a comprehensive energy policy here in the U.S. (thanks be to democrats and republicans alike) is the real problem. If we could strike a balance between developing and refining our own natural resources as well as create incentives for alternative energies thru the free market (not snake oil, like corn derived ethanol.)

If the politicians would just get out of the way ... sigh... Seems to be a recurring theme.

This time were starving the rest of the world in the name of heading off global warming.
Abusive comment hidden. (Show it anyway.)
The US isn't "starving the rest of the world". The rest of the world is failing to grow enough food to feed itself.

Since when has it been the responsibility of the US toi feed people in Africa? If Africans ended their tribal wars they'd be able to feed themselves.
Abusive comment hidden. (Show it anyway.)
I noticed that this week a case of Pampers size 5 diapers went from 19.95 to 23.95, in ONE WEEK! Milk is outrageous, and juice has gone up a dollar a gallon recently. We have this feeling that we should stock up, but we're afraid if we give into the panic we will only be contributing to the problem.
Has anyone else decided to stock up? What are your thoughts on doing so?
Abusive comment hidden. (Show it anyway.)
Why is it that the US has to be responsible for the woes of the rest of the world?

Why do our men and women have to die for the whims of the damned politicians?

We assume responsibility for stuff that we had nothing to do with... Does the name Viet Nam ring a bell?

Let's take care of our own people, before we mess with other countries.
Abusive comment hidden. (Show it anyway.)
The problem with some of the theories espousedhere is that we import a large amount of corn and now for the first time ever wheat as well as other crops. These countries that sell to the U.S. are receiving top dollar for their crops. It's not that they are not willing to feed themselves. It's basic economics of supply and demand. If you were a farmer and you had someone offering you 6 dollars a bushel for corn versus 4 dollars to a domestic buyer who are you going to sell to? It's easy for you to take the high road here when you're not struggling to feed your family and say you'd only sell domestically .

When the U.S. artificially inflates the price of food by consuming more than the current market can reasonably supply as well as offering subsidies to domestic producers, which further inflates the cost of food... than yes, we are starving other nations. No country is an island. trade is a basic function between nations as well as price indexing. The sophomoric view of these matters by some is really sad.

I agree that Africa as a whole needs to stop warring, but it's much harder than you make it out to be. When there are people in this world committing systematic genocide while the rest of the world turns a blind eye, it tends to complicate your one line view. It's very easy to turn food into a weapon when you control the government.
Abusive comment hidden. (Show it anyway.)
I'm pretty sure the US is a net exporter of food, and has been one for a long time.

And while Africa has its problems, those problems are not of America's making. If any African government was serious about feeding its own people, it could after all prohibit food exports.
Abusive comment hidden. (Show it anyway.)
The US has been selling cheap subsidized grains and other commodities to Third World countries for decades. These nations found it cheaper to import from America than to buy locally, which put many local farmers out of business. It's a bit late to turn that tide now.
Abusive comment hidden. (Show it anyway.)
"We have seen the enemy, and he is us." -- Pogo

>>> Yes, it's the oil -- but because we love it. <<<

We're all for community/urban design, but we'd like to keep our beautiful home in the hills/suburbs/wherever far from work, and we don't mind the commute.

We're all for public transpo, as long as we can keep our cars ...and use them.

We'll get that hybrid vehicle, when the cost comes down to the average price for the class of car.

We'll push for tougher automotive standards of efficiency, as soon as the referendum comes up in my town.

We're all for "solar"*, and we'll make our houses "solar" as soon as it becomes affordable. Now, what's on TV? (My big plasma one.) [* or other renewable energy source apparati.]

***

All our activity props up this Magnificent Economy, which provides us with a Glorious Military, with which to spread Democracy (is that all?); provides us with the means to pursue the Life of Success that we desire, with all its trappings.

***

To maintain the environment and kick the foreign-oil monkey off our backs (or even the domestic one, for that matter), WE SHOULD HAVE BEEN LIVING LIKE THE AMERICAN NATIVES...

..."But they didn't have TV." And what a boon that's been for us. Accurate transmission of information controlled by the people and thoughtful, intelligent entertainment aimed at enlightenment of the people. Oops. [and Movies, DVDs, CDs, etc.]

..."But they didn't have antibiotics etc." Yes, because Big Pharmaceutical gives us great meds and none that we don't need. Big Pharma has only our best interests in mind and never develop products simply to sell for profit. Oops.

..."And they were susceptible to the caprices of Nature and could die in large numbers because of drought, blight, disease." We are on the verge of cracking the DNA code and other mysteries of biochemistry to achieve 100+ year lifespans, nevermind what quality of life that may be and what perils of overpopulation that may bring. Just bring us Long Life.

***

We, when were Native Somethings, ate what we could hunt or gather; now we eat all that we can make, engineer, coerce into vigorous bloom. Now we are never satisfied with what we have, or even what we will have tomorrow. We buy and sell Futures, for goodness sake.

And now we're EATING IT, the Fruit of all our Labor. At increasing cost. Recall that the economists often define cost beyond price: social cost.

***

WE'VE THOUGHT THIS (chemistry, medicine, engineering and technology, economic policy...) ALL THE WAY THROUGH. We know what we're doing, for now and for generations to come.

Oops.
Abusive comment hidden. (Show it anyway.)
Don't forget 7 years of drought in Australia has caused the price of rice to double in the world so countries like Senegal and Haiti who import most of their rice are suffering.
Abusive comment hidden. (Show it anyway.)
I know this report isn't really concerned with organic food, but the rising price of food in general means that the fad for organic food is more environmentally unfriendly, selfish, irresposible and wasteful than ever. How can we justify using seven times the amount of fertilizer and double the acreage for the same-size crop as a conventional farm? How can we justify driving small-scale farmers, who cannot afford to purchase the extra land or the extra fertilizers required to 'go organic', out of business? How can we justify using deliberately inefficient farming techniques that allow high proportions of the total crop to perish in the field? How can we justify this perverse fetish for inflated food prices when we have to ability to produce food cheaply, safely and efficiently, and in higher yields than ever, thanks to modern farming techniques?

Organic food is not better for you than conventionally-produced food and is worse for farmers and the environment. The reason it costs more is because of the increased cost of fertilizers (they cost more to buy, and the farmer has to buy more of them per acre), but also because it's such a big fad and the producers can get away with the higher price tag. Much of the world is starving, and the West is actually finding ways of deliberately inflating the price of food by producing it 'organically'. It's absurd, and it's obscene.
Abusive comment hidden. (Show it anyway.)
I've been studying precisely this problem with tremendous interest for over fifteen years, since halfway through getting my Environmental Studies degree.

The solution relates to the fact that it takes ten times the land to feed a typical meat-eater compared to a vegetarian. It also takes 100 times the water to produce meat compared to vegetables and grains.

If people quit killing animals for food, there would be more than enough agricultural land to feed us and to provide for our biofuel energy needs. Many of our other environmental problems would be greatly reduced or solved as well by the simple act of choosing vegetarian meals.
Abusive comment hidden. (Show it anyway.)
How pointless is ethanol? Not only is it incredibly inefficient (it would be north of $6/gallon without subsidies) but it's incredibly unethical as well. Sorry, millions of Americans who aren't eating well (not to mention the billions worldwide), but we'd rather keep America rolling on our autos instead of doing the greater good.

The answer, which will take many years of complaining, lobbying, and possibly riots, is to get off of oil as much as possible. A regional train network instead of repaving the interstates every year would be step one.
Abusive comment hidden. (Show it anyway.)
Willo the Wisp, your comment is based on some old myths about organic farming (that it somehow produces less per acre, generally not true), and on a common misapplication of technically "organic" techniques within an otherwise "conventional" agricultural practice (i.e. simply swapping technically "organic" fertilizer inputs for technically "nonorganic" inputs, so it still requires a large outside supply of expensive fertilizer; an optimal organic/biodynamic farm makes its own fertilizer, and the only major "input" is time and work.)

Well, this afternoon I'm going to do a bit more planting in my "organic" garden... which has cost me nothing this year other than about $30 for seeds and a few weekends worth of work.

Anyway, find some local farms near where you live. You may still be paying more than at the supermarket, even with the recent price increases, but you will be contributing to longer term stability and local economic health.
Abusive comment hidden. (Show it anyway.)
Login to comment.
Click here to access all of this post's 30 comments




Email This Post to a Friend
"Why Food Prices Are Skyrocketing"

Separate multiple emails with a comma. Limit 5.

 

Success! Your email has been sent!

close window
X

This website uses cookies.

This website uses cookies to improve user experience. By using this website you consent to all cookies in accordance with our Privacy Policy.

I agree
 
Learn More