Explaining Record High Food Prices

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The United Nations announced last week that food prices had hit a global high, causing world leaders from Paris to New Delhi to promise a swift response. A series of extreme weather events in Russia, Australia, and Latin America have sharply reduced global supplies of wheat, corn, and soybeans, causing prices to rise. How serious is this problem? Here's what reporters and analysts are saying.

  • 'The Great Food Crisis of 2011'  Foreign Policy's Lester Brown warns of "trends on both sides of the food supply/demand equation that are driving up prices. On the demand side, the culprits are population growth, rising affluence, and the use of grain to fuel cars. On the supply side: soil erosion, aquifer depletion, the loss of cropland to nonfarm uses, the diversion of irrigation water to cities, the plateauing of crop yields in agriculturally advanced countries, and--due to climate change--crop-withering heat waves and melting mountain glaciers and ice sheets"
Beyond what it would mean for the millions of people who literally cannot afford to eat when food prices to go up – and that's a hard fact to get beyond – higher food prices could destabilize whole economies. When large swaths of the large and influential middle classes in nations like China and India have to switch to using the bulk of their dispensable income on food, and stop their habitual consumer spending, the financial recovery happening in those places--not to mention in countries like the U.S., who are counting on those recoveries to bolster their own--could be pushed to the brink.
  • How Shipping Skews the Food Market  The New York Times' Paul Krugman explains that "The volume of world shipping has, of course, risen a lot over the past 40 years--almost 250 percent" but the value of those shipped goods "has risen more than twice as much," the result being "a shift toward more electronics and other high-value-to-weight goods." But food doesn't have a very high value-to-weight, thus increasing prices because of the marginally increasing shipping costs.
  • We've Survived Food Price Spikes Before  The New York Times' Andrew Revkin cites the "experts who repeatedly, and less sexily, note that humanity, on the whole, has always overcome shortages and found ways  to produce ever more food even as mouths multiply and  rising incomes move families up the food chain from grains to meats and dairy. They're mostly not saying, 'Don't worry, be happy,' but they’re definitely not urging listeners to buy food insurance, as Glenn Beck’s show periodically does, or to  gird for the collapse of modern civilization, as resource pessimists have long intoned."
  • Part of Inflation's Rising Tide  The Weekly Standard's Irwin Stelzer writes, "The threat of inflation is magnified by soaring commodity prices, mitigated only slightly be recent dips. High demand from Asian and other developing countries is driving up the prices of food (now at a record), clothing (cotton is up), and just about everything that contains copper or other minerals."
  • France Pushing for Food Market Reform  Reuters' Sybille de la Hamaide reports, "French President Nicolas Sarkozy pressed for international efforts to impose greater transparency in commodity markets trading and pricing during a meeting with his U.S. counterpart Barack Obama at the White House on Monday."

This article is from the archive of our partner The Wire.