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The Perfect Storm of Food

by: Eddie C

Thu Mar 03, 2011 at 13:41:18 PM PST

( - promoted by Jill Richardson)

Export prices for major grains were up 70% last month versus February 2010.

After droughts in eastern Europe and floods in Australia, today's news that Food Prices Reach New Record & Could Push Higher is a warning of bad news yet to come.

While higher food prices mean many people in the developed world will face larger bills at the supermarket, it could also push the number of chronically hungry people over the 1 billion mark, meaning roughly one-seventh of the world's population could lack food security.

January was a record month when the FAO food price index had had increased by 3.4 percent from the prior month and in February World food prices rose another 2.2 percent. This is the "highest level since the UN's Food and Agriculture Organization (FAO) began monitoring prices in 1990."

Then there is the possibility that rising oil prices may drive food prices even higher. Some are claiming that the gasoline price spikes should be temporary and calm down as things settle in Libya but there is evidence that the unrest in the Middle East is a preview of things to come.

Dramatic increases in oil prices, forecast for between now and 2020, render coming oil shocks a danger to American diets. Shell oil company believes that traumatic energy events could begin as early as 2015. Adding to the concern, recent unrest in Egypt underscores the international energy network's exposure to areas of the world set for tremendous change and unforeseen supply disruptions.

On the home front, to make it A Perfect Storm there was President Bill Clinton's recent warning too much ethanol could spark food riots and Congress trying their hardest to make matters worse.

The FAO report is the latest troubling analysis to land at the feet of U.S. policymakers as they consider the possibility of deep and misguided cuts to U.S. food assistance by Congress in the coming weeks. The World Bank estimates that the spike in food prices since June has placed 44 million people into extreme poverty. And the U.S. Department of Agriculture is forecasting U.S. food prices will increase 4 percent this year, squeezing already tight family budgets.

Four percent for the year? World Food prices went up 3.4 percent in January and 2.2 in February but the U.S.D.A. is predicting four percent for the entire year in American supermarkets?

Eddie C :: The Perfect Storm of Food

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The Perfect Storm of Food | 7 comments

Americans tend to be shielded (4.00 / 3)

from some of the price increases for commodities because very little of our food prices goes to pay for the actual food. We spend a significant chunk on transportation, middle men, retailers, advertising, and packaging.

"I can understand someone from Iowa promoting corn and soy, but we are not feeding the world, we are feeding animals and soft drink companies." - Jim Goodman

by: Jill Richardson @ Thu Mar 03, 2011 at 22:19:23 PM UTC

by: you @ soon

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WIC (4.00 / 2)

The actual USDA forecast is 3 to 4 % for all food, not 4%.

Eggs declined 14.7 % in 2009 and increased 1.5% in 2010.

Eggs are forecast to increase 3.5-4.5% in 2011.

Dairy declined 6.4% in 2009 and increased 1.1% in 2010.

Dairy is forecast to increase 4.5-5.5% in 2011.

Do families on WIC budgets use eggs and dairy?

The lowest forecast increase is for nonalcoholic beverages (Coke, Pepsi, bottled water). I'm so glad.

by: count @ Thu Mar 03, 2011 at 22:58:55 PM UTC

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Yea that got me too (4.00 / 2)

Coca-Cola will iron things out, along with "Sugar and sweets" and "Other foods."

No but seriously,in the breakdown the only foods with numbers that match predictions are "Poultry," that's easy Manhattanites are raising chickens now. "Other meats" fixes the meats Americans consume and then "fruits and vegetables" will fill the void.

Well like Jill said "We are shielded." With a significant chunk going to truck drivers, middle men and retailers, they all seem to be in a constant deflation, at least payroll wise.

I know that most of my life when I see inflation predictions from my government it always seems to need to be revised upward and with oil based agriculture, I'm thinking there will be more of the same.

by: Eddie C @ Thu Mar 03, 2011 at 23:20:50 PM UTC

[ Parent ]

What is a food crisis? (4.00 / 2)

lnteresting quote from Eddie's first link:

"It's very unlikely we will see a food crisis in 2010-11 but we can't exclude such a situation in 2011-12."

by: count @ Thu Mar 03, 2011 at 23:25:35 PM UTC

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I don't know but the guy that said it. (4.00 / 3)

Abdolreza Abbassian, is a name that is familiar to me from both NPR and the PBS NewsHour, always taking about international rice and grains.

His full title is Senior Grains Economist, U.N. Food and Agriculture Organization,

"I've never loved rice more than now," Abdolreza Abbassian, a senior economist at the FAO in Rome, said by phone. The grain is the staple food of more than half of the world population, according to the International Rice Research Institute. "Probably rice is the commodity which is separating us from a food crisis," Abbassian said.

Perhaps 2011-2012 will be a bad year for rice. Early indicator?

Myanmar halted rice exports to keep local prices in check, a senior industry official said Thursday, as the country grapples with a bruising new round of inflation.
The halt wasn't expected to create major dislocations in the market for Asia's most-important food, in large part because Myanmar isn't a main exporter of the crop. Still, it underscored that governments remain jittery about the cost of food, which helped to trigger the unrest in the Middle East

Who knows? I'm no food expert. The only thing I'm an expert on is politicians. I know they are all full of crap.

by: Eddie C @ Thu Mar 03, 2011 at 23:44:47 PM UTC

[ Parent ]

1981-2006 World Food Poverty Crisis (4.00 / 1)

I understand the impact of the recent higher prices on hunger. People are desperately poor and many more can't afford the food. They must be fed, with food purchases in LDCs, and at fair trade, living wage prices.

Here, apparently in all the sources cited, and about everywhere else, people are forgetting what we knew only a few years ago: the dumping of cheap, below cost grain, causes food poverty. Overproduction of low priced farm commodities clearly is not the solution. We did that for a quarter century, 1981-2006 for corn, wheat, rice, cotton, soybeans, barley, oats, and grain sorghum, (and some others) (USDA-ERS, prices vs full costs: http://www.ers.usda.gov/Data/C... The argument that only a few years of higher prices, not the previous quarter century, is the problem, don't stand up when more data are added.

LDCs are 70% rural. They depend upon farm income for economic stimulus. The few years of higher prices aren't helping as much as they should because of all of the destruction over a quarter century and over 55 years of lower and lower grain prices, with only 2 exceptions until now. We're the dominant farm exporter. We chose to secretly lower export value/unit. We chose to lose money on farm exports for a quarter century, unlike OPEC in oil. Wheat and oil used to be similar in price, a barrel for a bushel. Soybeans too. 2.5 bu. corn. Several barrells per hundredweight of rice. Now, at todays higher prices, grain prices are small fractions of oil.

This blog gives NO standard of a fair trade living wage farm prices for LDCs. Farmers in the US understand this, but not the food movement.

Ok, February 28 we had the highest price for corn ever at my local elevator, $7.08. that's 1 day over $7 and 3 l days in 2008 ($7.02, $7.01, $7.03). Adjusted for inflation, in 2010 dollars, even those single, so-called record prices are nowhere near the real records. Why have you not heard this anywhere else? I mean, I know that you haven't. I know that's true.

I heard that corn hit $2.80 in 1947 (see they guy at 5:10 into my YouTube video, "Food Movement 1985": http://www.youtube.com/user/Fi... or about $22.30 in 2009 dollars using a GDP deflator (http://www.measuringworth.com/calculators/uscompare/result.php?use%5B%5D=GDPDEFLATION&year_source=1947&amount=2.80&year_result=2010).

The average price of corn for whole years, in 2010 dollars, was above $10/bu 22 times previously. Get the data on prices at http://usda.mannlib.cornell.ed... if you don't believe me. The highest recent yearly average was $4.20 in 2007 (and over $5, I've heard, for 2010). $4.20 is less than 1/4 the record of $17.37 (average for a whole year) of 1947.

Adjusted for inflation, we had 8 of the 10 lowest corn prices in history 1998-2005. Get it?

We find, then, that we have a raging dilemma, where we've so devastated these poor countries that we hurt them also when we try to help them.

Put some numbers to it folks, to understand how poor they really are. Ok, yes, from September 2005 (the lowest price year in history) to January 2011, the farm price of 20 pounds of wheat went up $1.35, rice went up $1.41, corn went up $1.30. Ok, it needs to be milled, hulls removed. Ok reading my package, 20 pounds of rice is 220 servings. Call it 200. No, call it 100. Call it whatever. Ok, call it 141 servings for a child. $1.41 divided by 141 servings is an extra 1¢ per serving, every meal. That farm price increase, to help rice farmers in Haiti, etc., more than doubled the cost ($2.74/20lbs=11¢ per pound or 1.6¢ per child serving, or do you need servings twice as big. But then oil went up, so how about increased transportation and milling costs. So these people are unimaginably poor, in the thinking of most Americans.

Ok, who wants to claim that there was no food crisis in LDCs 1981-2006?

We need farm price floors and ceilings and supply management, including reserves, with NFFC's Food from Family Farm Act. Where did the food movement advocate for any of those policies (even ceilings for high farm prices). NFFC's views are shared by La Via Campesina (http://www.zcommunications.org/via-campesina-with-nffc-support-for-fair-farm-prices-by-brad-wilson) and the Africa Group (mostly LDCs) at WTO (http://www.tradeobservatory.org/library.cfm?refid=88129).

Ok, maybe my math is wrong. Let me know either way if you check it. (Corn bu-56 lb, wheat/bu 60 lb). The point is, we need to think these things through, and actually support LDCs in the farm bill, instead of calling for mere subsidy reforms.

"We're trying to warn this nation of a tidal wave ..., and it's coming your way, whether you want to know it or not...!" female family farm activist in Iowa warning against agribusiness, Donahue Show, 1985

by: Brad Wilson @ Thu Mar 10, 2011 at 18:05:38 PM UTC

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Are you crazy? (0.00 / 0)

Let's put it this way:

we need to think these things through, and actually support LDCs in the farm bill

Under what circumstances would our political class give that serious consideration for even one tenth of one second? Certainly not under any circumstance prevailing now.