Tuesday, April 29, 2008

Higher Food Prices, Riots, Shortages - What Is Going On?

A must read piece from Fabius Maximus:

Summary: Many factors are driving up food prices, but the elephant in the room is global inflation. This explains why prices are rising throughout the entire commodity complex (energy, industrial materials, precious metals, agriculture). Plus brief discussions of biofuels, long cycles of food prices, the role of government policy, and the likelihood of resource wars.

“Global Market Brief: Food Cost Crises”, Stratfor (13 March 2008) — Opening:

Global wheat prices rose by 83 percent at the outset of 2008 compared to 2007 prices. Soybean prices hit an all-time high of $14.22 a bushel in February, while corn prices rose to a 12-year high of $5.25 a bushel. The U.S. Department of Agriculture reports that global grain reserves have plummeted to the lowest level since 1960. Prices likely will not fall for some time; as a matter of fact, the International Food Policy Research Institute predicts that global cereal prices will be 10 to 20 percent higher by 2015.

I agree. We part company when it comes to the causes. (Bold emphasis added)

Read more ....

Update: Now It’s the $6 Loaf of Bread -- Newsweek

My Comment: Food, like energy, have always been strongly influenced by government policies. When times get rough .... governments have always implemented policies to enhance and/or super cede their past policies. In almost all cases this has always resulted in more shortages and higher prices. Will food become more expensive ... yes. If history is any indication, as long as food policy is dictated by government fiat and regulation, the price for food will always increase.

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