More Good News
Sep 28th, 2007 at 9:54 am by Susie
Isn’t globalization everything you thought it would be?
The reversal of a long-term trend toward lower grain prices could have profound effects on the world’s ability to feed its poor. Global grain stockpiles are being drawn down to their tightest levels in three decades, leaving the world vulnerable to shocks brought on by bad harvests. And it’s far from clear how much more land could be brought into production or to what extent advances in biotechnology might increase crop yields in the future.
American families, which spend 9.9% of their disposable income on food, are facing the fastest-rising food prices in 17 years. The consumer’s cost for everything from yogurt and popcorn to breakfast cereal and fast-food french fries is climbing. In U.S. cities last month, the average retail price of a pound loaf of whole-wheat bread was up 24% from a year ago, according to the Bureau of Labor Statistics. Whole milk hit $3.807 a gallon, up 26%.
Similar increases are showing up abroad. Italian shoppers are protesting soaring pasta prices, and Mexican authorities have capped the price of corn tortillas. Pakistan is curbing wheat exports to counter rising food-price inflation while Russian authorities, worried about rising bread prices, are considering a similar clampdown.
Food companies are struggling to figure out how to pass on higher costs to supermarkets and restaurant chains, which have gotten bigger and thus gained clout since the last prolonged rise in food prices in the 1970s.
“We’re in uncharted territory,” says Christopher Fraleigh, chief executive of the food and beverage division of Sara Lee Corp., which earlier this month raised its bread prices 5%.
The biggest price rises are in corn and products that depend on corn, e.g. eggs (up 30% or more in my area), and that’s because ethanol producers compete with the chicken farmers and muffin bakers– not globalization per se, but the horrible incentivization of the ethanol industry as engineered by Archer Daniels Midland and friends.