July 24, 2008
Thursday

People around the world are experiencing sticker shock at the grocery store, the result of runaway economic forces that show no signs of abating.

Here in the United States, the price of eggs jumped 29 percent last year. Dairy products are up more than 7 percent. And the price of corn has tripled in the past four years.

It's even worse worldwide.

Globally, the food price index calculated by the Food and Agriculture Organization of the United Nations rose by nearly 26 percent last year, compared with 9 percent the year before. So far in 2008, that same index has jumped to unprecedented levels.

Spiraling food prices make a triple whammy for Americans, who are simultaneously being hammered by staggering gas prices and the mortgage crisis, with little meaningful relief in sight.

The economic forces pushing prices are complex. Some of the bigger reasons for rising food prices include:

Demand

Growth in China, India and other developing countries, where economies are expanding and an increase in the standard of living boosts demand for feed grains and high-quality foods.

Supply shocks

The prolonged drought in Australia is severely limiting that country's wheat production.

Hoarding

Some countries, notably Thailand, Vietnam and India, put a cap on rice exports this year to make certain they have enough for their own people, and reducing supply causes prices to rise.

Biofuels

The food economy is impacted by biofuel production, because as corn prices climb, they bring up prices of other commodities.

Climate

Many believe that climate change may be responsible for other poor harvests.

U.S. trade

Near-record U.S. exports of some agricultural products have added price pressure to wholesale and retail markets, as the weak dollar has made exports less costly for many countries.

Daniel Sumner, professor and director of the University of California Agriculture Issues Center at UC-Davis, adds one more cause to the list -- one that may remain a factor after others are resolved: There has been a decline in investments in agricultural research and development at the federal and state levels and worldwide, with more resources diverted to improving efficiency, he said.

"It's a long-running phenomenon I think we ought to pay a lot more attention to," Sumner said.

Of course, the poor suffer the most when food prices spike.

The crisis presents an enormous challenge to the World Food Program of the United Nations, the world's largest humanitarian agency, working on the front lines of hunger in 80 countries. The program and other agencies that work to alleviate hunger are losing ground.

Josette Sheeran, executive director of the World Food Program, said this year that soaring global food prices could lead to a "silent tsunami" that would push 100 million people who previously did not require help to buy food into hunger and poverty.

Sheeran added, "This is the new face of hunger -- the millions of people who were not in the urgent-hunger category six months ago but now are. The world's misery index is rising."

Sheeran said the escalation in global food and fuel prices has added urgency to efforts to deliver lifesaving assistance to tens of millions of the world's most vulnerable people. She called the spike "the most aggressive pattern of global increases perhaps ever recorded."

Last month in Rome, the message at an emergency food summit was that a billion hungry people could become restless and stage food riots like those that have already erupted in pockets of poverty, such as Cameroon, where there were deaths, and in Haiti, where the prime minister was forced out.

In Rome, U.N. Secretary-General Ban Ki-moon told approximately 40 world leaders, "Nothing is more degrading than hunger, especially when manmade."

In the meantime, high prices for some mean hunger pangs for others.

"The world's poorest people will be hardest hit by the global rise in food prices," said Joachim von Braun, director general of the International Food Policy Research Institute in Washington. "Poor people in developing countries typically spend more than half of their overall budget on food. For 160 million people worldwide who survive on less than 50 cents a day, food-price inflation can spell disaster."

SitNews ©2008
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