6 Causes Of High Food Prices

food prices

In recent news, the global hotspots for hunger is only getting larger and more diverse. In just a few short months, I’ve heard conspiracy theories from disgrunted ex-employees of large companies who believe they understand the causes of high food prices. In fact, they do not.

To fully comprehend the food prices, it’s necessary to step out of the thinking locally mentality and see it from a global perspective.

High food prices are not caused by greedy supplement companies or the increased demand for pestisides on local farm crops. While that can change the local economy to some extend, it’s but a rain drop in a massive tsumani.

Source: FAO, 2008

The 7 REAL Causes Of High Food Prices:

  1. A sluggish U.S. economy. If the President and company doesn’t want to admit it, that’s fine. But facts speak for themselves. People are buying less.
  2. Record setting crude oil prices and peak U.S. gas prices.
  3. A larger than normal demand for biofuels and a decline in corn inventories.
  4. Drought reduced harvests.
  5. Commodities speculators.
  6. Rising demand for food supplies in massive countries like China and India.

Out of all the expert theories, reason #6 will continue to make the biggest long-term impact. As China and India start to demand more foods (eggs, chicken, dairy, fuel) than ever before, the supplies we bid on are now being bid on and consumed by other nations.

This increased demand globally will affect the food prices locally.

Suggested Reading:

Food Price Crisis Triggers Questions about Global Food Security

Prepare for a food crunch

Dani Rodrik’s weblog

World Wide Food Price Crisis

Biomass Energy To Drive Up Food Prices In Next 10 Years

Categories: Current Health News

  • http://businessmindhacks.com AlexSchleber

    Marc: Yes, the price of oil has an effect via transportation costs and indirectly the cost of fertilizers (which are natural-gas-based in many cases, the price of which tends to fluctuate with the price of oil for the most part).

    … Yes, the Chinese and Indian emerging middle classes are consuming more meats/dairy, which requires more feed. But at least half of the run-up in grains and everything they connect to has been caused by the INSANE ethanol subsidies.

    Your tax dollars (couldn’t get an authoritative total number, but it’s $7 Billion in Federal subsidies alone in ’07) are being spent to incentivise this madness, which in turn is costing you probably on the order of $1,000 more per person in your household per year. For a household of 4, that’s a $4,000 tax, pure and simple.

    And it wasn’t the Democrats either, this was instituted in 2005. Under the guise of an Eco-friendly program and energy independence, they are giving billions to mostly well-to-do agri-businesses and Archer Daniels Midland.

    Notice that the much more efficient bio-fuel from Sugar Cane has protective tariffs against it to “protect” the U.S. Sugar Cane industry.

    “America’s ethanol programme is a product of government subsidies.
    There are more than 200 different kinds, as well as a 54 cents-a-gallon
    tariff on imported ethanol. That keeps out greener Brazilian ethanol,
    which is made from sugar rather than maize. Federal subsidies alone
    cost $7 billion a year (equal to around $1.90 a gallon).”

    http://www.economist.com/displaystory.cfm?story_id=10250420

    Yet another distortion… it’s all madness, Ethanol from corn is about as far from a solution to our energy issues as there is. It doesn’t work energetically.

    DOESN’T WORK.

    (read why it doesn’t work here: http://www.news.com/8301-11128_3-9926823-54.html?tag=cnetfd.blogs.item )

    Anyone investing money into it’s production is doing this only because of the gov’t subsidies.

    1/3 of the U.S. corn crop is now being wasted on this
    ( http://www.economist.com/displaystory.cfm?story_id=10250420 )

    and the prices of all other grains have been driven up by this as well (wheat and soybeans especially), driving up the cost of staples and feed for everything (think grains fed to chickens, high-fructose corn syrups, etc. etc.). There is hardly a food out there not affected by this.

    Perfectly good food is being turned into inefficient fuel…

    In poor countries, there are already food riots because these people subsist on $1/day. They are hit the most directly.

    If this is allowed to go for long, this will further exacerbate the issues with radicalization that is already hurting U.S. interests. Talk about losing “hearts and minds”…

    http://www.economist.com/opinion/displaystory.cfm?story_id=11050146

    Pass this on to your friends, everyone needs to know about this madness. I cannot vote in this country, but you should all write your Congress(wo)men and demand that this idiocy stop, and soon.

    Best – Alex

  • http://businessmindhacks.com Alex Schleber

    Marc: Yes, the price of oil has an effect via transportation costs and indirectly the cost of fertilizers (which are natural-gas-based in many cases, the price of which tends to fluctuate with the price of oil for the most part).

    … Yes, the Chinese and Indian emerging middle classes are consuming more meats/dairy, which requires more feed. But at least half of the run-up in grains and everything they connect to has been caused by the INSANE ethanol subsidies.

    Your tax dollars (couldn’t get an authoritative total number, but it’s $7 Billion in Federal subsidies alone in ’07) are being spent to incentivise this madness, which in turn is costing you probably on the order of $1,000 more per person in your household per year. For a household of 4, that’s a $4,000 tax, pure and simple.

    And it wasn’t the Democrats either, this was instituted in 2005. Under the guise of an Eco-friendly program and energy independence, they are giving billions to mostly well-to-do agri-businesses and Archer Daniels Midland.

    Notice that the much more efficient bio-fuel from Sugar Cane has protective tariffs against it to “protect” the U.S. Sugar Cane industry.

    “America’s ethanol programme is a product of government subsidies.
    There are more than 200 different kinds, as well as a 54 cents-a-gallon
    tariff on imported ethanol. That keeps out greener Brazilian ethanol,
    which is made from sugar rather than maize. Federal subsidies alone
    cost $7 billion a year (equal to around $1.90 a gallon).”

    http://www.economist.com/displaystory.cfm?story_id=10250420

    Yet another distortion… it’s all madness, Ethanol from corn is about as far from a solution to our energy issues as there is. It doesn’t work energetically.

    DOESN’T WORK.

    (read why it doesn’t work here: http://www.news.com/8301-11128_3-9926823-54.html?tag=cnetfd.blogs.item )

    Anyone investing money into it’s production is doing this only because of the gov’t subsidies.

    1/3 of the U.S. corn crop is now being wasted on this
    ( http://www.economist.com/displaystory.cfm?story_id=10250420 )

    and the prices of all other grains have been driven up by this as well (wheat and soybeans especially), driving up the cost of staples and feed for everything (think grains fed to chickens, high-fructose corn syrups, etc. etc.). There is hardly a food out there not affected by this.

    Perfectly good food is being turned into inefficient fuel…

    In poor countries, there are already food riots because these people subsist on $1/day. They are hit the most directly.

    If this is allowed to go for long, this will further exacerbate the issues with radicalization that is already hurting U.S. interests. Talk about losing “hearts and minds”…

    http://www.economist.com/opinion/displaystory.cfm?story_id=11050146

    Pass this on to your friends, everyone needs to know about this madness. I cannot vote in this country, but you should all write your Congress(wo)men and demand that this idiocy stop, and soon.

    Best – Alex

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    [...] 7 Causes Of High Food Prices 7 causes of high food prices. To fully comprehend the food prices, it’s necessary to step out of the thinking locally mentality and see it from a global perspective. [...]

  • tiffani

    why are you lying to us you said 7 but there is only 6

  • http://www.nobullbodybuilding.com Marc David

    I figured that if I lied maybe you'd like me more?

  • jeff

    There are only 6 reasons whats the 7th? this guy needs to learn how to write an artical

  • jeff

    There are only 6 reasons whats the 7th? this guy needs to learn how to write an artical

  • http://www.nobullbodybuilding.com Marc David

    And maybe you could learn how to post a decent comment?

  • http://www.remortgagedeals.co.uk Trever

    3 years on and the situation is even worse. Food just keeps getting more and more expensive. I’ve taken to trying to grow a fair amount of fresh vegetables and that has worked well this year.

  • http://www.activebodi.com Wade McMaster

    I think the food prices are forcing some less quality foods to be bought on ahigher average every year, which can be amjaor cause of the extra obesity that costantlyseems to be growing. It’s unfortunate the decent food seems to be that bit more expensive…