Thursday, January 24, 2008

Food, Economy and Environment Memo: Is the Era of Cheap Food Over?

Food prices have soared throughout the world in the last year. For example, retail prices for staples such as bread, milk and eggs have increased by 20 -to- 30% in just the past 12 months in the U.S., and continue to rise this year.

Writing in the Christian Science Monitor, staff writer Peter Ford says all the experts, analysts and others he talked to for his story all say there's no end in site in terms of rising food prices. Rather, they say it's just a matter of how much the price of retail goods will increase and how fast that increase will be.

Ford says there are two primary causes for this global rise in food prices: the fact that fast-growing and developing countries China and India are buying and eating more food, especially meat, which is resulting in soaring feed grain costs and is reflected in retail price hikes in all grain-based foods and meats internationally.

The second primary cause of soaring food prices is the fact that a greater percentage of land is being used to crow crops like corn, sugar cane, grasses and other feedstuffs to make biofuels.

There is a finite amount of farmland in the world. If 15% or 25% more of that land is being used today to grow biofuel crops than it was two years ago, for example, that means 15% or 25% less land is being used to grow grains, which not only are used to make bread and other foods, but are the primary feed for cattle, pigs, poultry and other animals.

The result is, according to the experts Ford talked to for his piece, a steady diet of increasing food prices for the foreseeable future.

The implications for the food industry are clear: higher costs for ingredients for food manufacturers and marketers, price increases at retail for grocers, and a fear by both that consumers will express their displeasure at constant price hikes in new found ways to an industry that's generally succeeded in keeping the overall cost of food reasonable for consumers.

Read the full Christian Science Monitor article here.

No comments: