"The silent tsunami"

24Apr08

Food Costs rising fastest in 17 years

U.S. food prices rose 4 percent in 2007, compared with an average 2.5 percent annual rise for the last 15 years, according to the U.S. Department of Agriculture. And the agency says 2008 could be worse, with a rise of as much as 4.5 percent.

The jump has left people in the food business to do their own explaining. Twin Cafe Caterers in lower Manhattan posted a letter on its deli cooler: “Due to the huge increase of the gas, the electricity, the water and all the other utilities, we had to raise the prices a little bit.” It went on to say that all its food prices have risen, too.

Why is this happening? Due to global reasons in our resource-driven economy: sharply higher commodity costs for wheat, corn, soybeans and milk, plus higher energy and transportation costs.

There are of course more complex reasons. First of all, the rapid economic growth in China and India has increased the demand for meat. Meanwhile, the cheap dollar made exports of US products cheaper. As a consequence, the supply of corn available for sale in the US has raised prices there. Last but not least, the ethanol production has actually diverted corn from its main food function towards the fuel tanks..

Corn prices have soared, hitting $6 a bushel, up 50% from 2007 and triple the price of three years ago. Corn is the main ingredient in livestock and poultry feed, so prices of milk, chicken, and meat are also higher.BW


While farmer are making more corn than soybean, the supply of soybean has decreased and so its price went up. The drought in Australia appears to have affected the price of bread, as a consequence of the lower wheat supply worldwide.

Squeezed, by rising food costs,

(…) some stores are responding by expanding their food aisles. For instance, Family Dollar Stores (FDO), which has 6,500 stores in 44 states, recently boosted its space for food in an additional 2,700 stores; 1,500 stores now accept food stamps. “We have strengthened our everyday assortment of quick prep and ready-to-serve products in all stores, introducing larger family sizes and emphasizing private-label and value brands,” says Howard Levine, CEO of Charlotte-based Family Dollar, where food has been the biggest driver of sales in recent quarters.

The World Bank Policy, summits on the agenda, leaders rushing in to declare what’s wrong and how things should be done, always unveiling the worst possible scenario. People know what would happen if things keep going this way. People know it is not a positive outlook. This combination of food and energy prices, in the background of the MDG, is obviously not good. Leaders agreeing and supporting eachother in their affirmations and declarations. Yes, they all agree this is not a nice scenario.

So then? Let’s wait for summits and World Bank Policies to come up with solutions…

I am now asking.. what can each individual do in this case? How can we play a role and improve things and not wait for leaders to fly miles and meet up..?

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