Image from al-Arab Online.
A few years ago, when I started eating a strict gluten-free diet, my grocery bill tripled. I was shocked at having to pay $6 for a loaf of bread, and began using a bread maker to try to cut costs. Gluten-eating friends and family were invariably horrified when I told them how much gluten-free bread cost.
Now at $37.52 a bag.
Yep. From $9 bucks a bag 142 days ago.
I’m pretty much freaking out.
She’s not alone. Wheat and rice prices are spiraling, causing a rising sense of panic. Business magazines have begun throwing around words like “famine” and “peak wheat.” Rice has hit a 20-year high, and many rice-exporting countries are instituting bans or caps on exports in the hopes of meeting domestic demand:
Vietnam’s government announced here on Friday that it would cut rice exports by nearly a quarter this year. The government hoped that keeping more rice inside the country would hold down prices.
The same day, India effectively banned the export of all but the most expensive grades of rice. Egypt announced on Thursday that it would impose a six-month ban on rice exports, starting April 1, and on Wednesday, Cambodia banned all rice exports except by government agencies. (New York Times)
Food prices are spiking everywhere: while US consumers are feeling the squeeze with an overall 8.9% increase, in Egypt, prices are up by 50%. Food riots have broken out in Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen, according to the Times; the Globe and Mail adds Egypt and Cameroon to the list.
There are a number of reasons for the spike in prices. Much of the farmland once devoted to wheat is now dedicate to corn for ethanol production. Ethanol production is also cutting into the production of corn for food, leading to an increase in prices for corn-based ingredients– and as fans of Michael Pollan already know, corn is in just about every processed food produced in the US, in one form or another. Last year 24% of the US corn crop went to ethanol production, and that number is expected to increase this year, thanks to heavy subsidies in the US and European Union.
Droughts in Australia, bad harvests in South America, urbanization of farmland across Asia, and rice-destroying plant viruses in Vietnam (where rice prices have risen 60%), in addition to export caps, are also driving increases. Increased demand for meat in India and China means that a greater amount of grain goes to livestock, since it takes about eight pounds of grain to produce one pound of beef. And since the global food industry relies on oil for processing, transportation and packaging, among other things, the soaring cost of petroleum (thanks, George!) keeps pushing food prices into the stratosphere.
Dwindling grain reserves are adding to the global sense of unease. MSN Money reports that
wheat inventories, called “carry-overs” in the trade, are at 30-year lows even though world wheat production was actually up 1% last year. In the past year, reports show, wheat inventories in the European Union have plunged to 1 million tons from 14 million tons.
A leading Canadian fertilizer executive told analysts recently that according to his company’s calculations, global grain reserves are “precarious,” at just 1.7 months of consumption, down from 3.5 months of reserves as recently as 2000.
In Asia as well, rice inventories have fallen, as the cost of maintaining them increases. Indian economist D.H. Pai Panindiker told VOA News: “At one time, we used to have very large buffer stocks, and those stocks have come down drastically. Now the possibility of expanding that scheme to reach more people is almost out of question, because there are just no stocks available.”
In a crisis that is squeezing even the middle classes, the consequences for the poor will be drastic. In the US, demand is up at food banks, and shoppers are finding new ways to cut down on food expenditures. An MSN message board that asked readers how they were keeping their food bills down garnered 37 pages of responses, most of them along the lines of this one:
We have gone from having 3 regular meals to breakfast, really small lunch (fruit or a yogurt) and an early dinner. We have been going to bed a bit earlier also to avoid being hungry after an early dinner. Seems to be working . The only thing I “splurge” on is hormone free milk. also stopped buying canned goods except for generic cream of chicken/mush. I have noticed that the junk food (which we dont buy) has stayed the same price or is always on some ultra-low sale… go figure…
But the squeeze will be even more drastic in countries already suffering from high rates of hunger. China has begun cracking down on angry citizens, whose demands for food threaten China’s already tarnished Olympic image. Half of Indian children under five already suffer from malnutrition. What will happen to them? How will Somalians, whose government is on the verge of collapse as the threat of famine looms, survive?
Joe and I are feeling the squeeze between food prices, rising prescription copays and student loans. We’ve started writing weekly menus and buying only what we need for the meals we outline. We’re designing them to utilize leftovers as much as possible, and to rely on local ingredients when we can– they’re starting to look like a bargain these days. No more buying lunch out, and I’m afraid we won’t be reviewing too many high-end restaurants. Tell me, readers, what are you doing to survive the crunch? Do you think this is the end of cheap food for good, as some economists are predicting? Also, if any of you readers are more conversant than I am with the ins and outs of the commodities market, I’d love your input.