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Rising Global Food Prices Cause Worry

Rising oil prices and poor staple crop outputs causes food inflation to become global financial concern for consumers and governments alike
 Rising Food Prices Are of Special Concern for Poor Coun..
 
 

Reuters reported today that the global food prices rose for the third month in a row, according to the United Nations. The U. N.’s Food and Agricultural Organization (FAO) index rose from 215.4 points in February 2012 to 215.9 points in March, a small amount but still enough to cause concern about future increases. The FAO index measures the monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar.

The causes of this price increase has been linked to rising oil and energy costs as well as decreasing crop production due to weather and demand changes.

"The food price index has an extremely high correlation to oil prices and with oil prices up it's going to be difficult for food prices not to follow suit," said Nick Higgins, commodity analyst at Rabobank International to Reuters.

Of particular concern for global leaders is the effect these rising prices could have on poor and developing countries that have to import food. According to Reuters, the net cereal import bill of the low-income deficit countries (LIFDCs) is projected to increase to $32.62 billion from $32.28 billion due to lowering production and higher costs. This is a seemingly small growth looms large when the true poverty of these people is taken into account.

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The crops of particular concern are corn and wheat, with FAO’s estimate of world cereal production at 2.343 billion tones, a fall of 1.4 percent from last year’s record, according to the FAO's senior economist and grain analyst Abdolreza Abbassian. Abbassian also said corn stocks were still far off the mark of security and needed more output.

There is some potential good news as Abbassian also predicts the possibility of world food prices decreasing during the second half of this year as new crops ease the market and driving down the full-year average prices.

Lately food production has received a lot of attention nationally due to the firestorm of public attention that scrutinized the healthfulness of Pink Slime/ Boneless Lean Beef Trimmings (BLBT). This particular issue brought to light the disconnect between food consumers and food producers as to what constitutes transparency and healthy food options.

Similarly small issues like the vanilla shortage take on a bigger meaning in light of a rising food cost crisis. It highlights the realities and weaknesses of a centralized food supply that causes farmers and consumers alike to depend on the efficiency and viability of such a system.

It’s enough to make me want to start my own urban garden or at least try to hit the farmer’s markets rather than the chain grocery stores. Lucky for me I have those options.

For graphics on agricultural food prices:

link.reuters.com/vuc96s



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