by Val Germann
There seems little doubt that 2008 will be a year of sharply higher food costs world wide. Today’s BBC website contains an article reporting that wheat futures have just cracked the $10.00 level and are certain to go even higher.
There are several reasons for this price increase but the bottom line is singularly clear, as the BBC explains.
Wheat prices have nearly doubled since the start of the year, fanning fears about food price inflation at a time when the global economy may be slowing.
We here in the United States do not worry about food but that situation does not obtain everywhere. Food shortages in other countries have hit hard and brought all kinds of troubles in their wake. Mexico has seen food riots over increasing corn prices, caused in part by the ethanol boom here. But wheat is even more of a primary food grain and shortages in that market could have serious reprecussions planet wide. Here is another BBC quote that should raise some eyebrows.
Rising wheat prices have been passed on to consumers worldwide and sparked protests in Asia. Protesters in Pakistan have blamed President Pervez Musharraf for failing to control prices.
When you consider how unstable Pakistan is, and that it possesses nuclear weapons, it’s easy to see a “perfect storm” of problems if wheat prices get too high. But the prospects for low prices are not good as a continuing drought in Australia cuts severely into that nation’s wheat exports, and problems in other countries continue to, shall we say, crop up.
Australian exports are expected to halve, while Argentina temporarily halted wheat exports this month to assess damage caused by cold weather. Russia is expected to ban wheat exports next month.
Not so good, is it? No, it’s not, especially when combined with the ongoing shift of acreage from wheat to corn here in the U.S., one result of our corn ethanol programs.
A review of the world’s press shows that in spite of the widely known facts above there seems to be little official concern about food prices. But that could change, in a hurry, as 2008 unfolds.