After nearly two decades of low food inflation, prices for bread, milk, eggs, and flour are rising sharply, surging in the past year at double-digit rates, according to the US Labor Department. Milk prices, for example, increased 26 percent over the year. Egg prices jumped 40 percent!!!
Escalating food costs could present a greater problem than soaring oil prices for the national economy because the average household spends three times as much for food as for gasoline. Food accounts for about 13 percent of household spending compared with about 4 percent for gas.
Several factors contribute to higher food prices, but none more than record prices for oil, which last week closed above $122 a barrel. Oil is not only driving up production and transportation costs, but also adding to demand for corn and soybeans, used to make alternative fuels such as ethanol and biodiesel. Some one-third of the U.S. corn crop (UP FROM 1/4 not even a year ago) now is devoted to ethanol production, its growth due to a combination of high oil prices and generous government subsidies. When corn prices were lower a few years ago, ethanol was seen as a popular energy alternative. Biofuel mania, or speculating in commodities by hedge fund and traders betting on corn prices, is also responsible for shortages and price increases.
Because of this, corn prices have more than doubled in commodity markets over two years, and soybeans nearly tripled! Unfortunately, poor harvests in major wheat-producing regions have more than tripled wheat prices.
These crops have a major impact on food prices because they form foundations for many products, including oils, sweeteners, and flour. Corn, for example, is a key ingredient in livestock feed. When the price of corn rises, so does the price of feed, and ultimately, so do the prices of meat, poultry, and eggs.
In grim World news, the United Nations World Food Programme (WFP) is struggling to feed the millions of hungry people around the globe. In countries where people subsist on less than $1 per day, many have cut back on meals, only eating several times per week. The UN can buy 40 percent less food than they could last June with the same contribution.
What can you do? Locally, you can continue to support your hometown Food Banks—every small contribution can make a difference. Globally, pay attention to the ongoing debates around big oil production AND production of alternate fuels such as ethanol and biodiesel—while they are both excellent products for the earth, their production is reaking havoc on the hungry of the world. They are made with corn and soy, respectively, and when those crops are going into their production, they are NOT going into the mouths of the hungry. Something needs to give: biofuels are good for the earth and absolutely need to be produced and utilized—but not at the risk of a continuing food crisis. Encourage your representatives to address the oil price inflation: the sooner we get it in control, the sooner we can stabilze food prices AND safely produce alternative fuel.
*sources: Boston Globe, U.N World Food Programme