Global food prices hit record high

[Hannah Bell]

The UN’s Food and Agriculture Organization recently announced that the food price index has now broken a previous record set in 2008, when food prices nearly doubled over the course of 18 months, leading to popular upheavals in dozens of countries.

Rising food prices, which have shot up 25 percent in the past year, have precipitated riots and demonstrations in Tunisia, Morocco, Algeria, Jordan, Mozambique and Yemen in recent weeks.

Skyrocketing costs were a contributing factor in the popular upsurge in Tunisia that toppled the dictatorship of Zine El Abidine Ben Ali last week. In Algeria, at least three people have been killed in clashes with police after the government slashed food subsidies.

Over the past year, the commodity food price index for corn has risen 52 percent, for wheat 49 percent and for soybeans 28 percent. Non-staple cash crops have also risen dramatically, with coffee up by 53 percent and cotton 119 percent.

The sharp rise in food prices is partly attributable to a bad crop year, exacerbated by a series of natural disasters. Droughts in Argentina and Russia, both major food producers, have decreased output, while recent floods in Brazil and Australia have completely wiped out some crops.

But the rise in commodity prices is not confined to agricultural products, although the increase is most dramatic there. Brent Crude oil hit nearly $100 per barrel last week, and has increased in price by 26.54 percent from a year ago, when it was trading at $75 per barrel. Copper, meanwhile, is up 30 percent over the past year.

While unfavorable crop conditions no doubt have played a role in driving up food prices, this cannot explain the fact that the price of crude oil and copper have increased at the same rate, and in some cases faster, than staple foods.

In December, it was revealed that a single anonymous investor controlled 90 percent of the copper supply in the UK, in an attempt to corner the market. Suspicions loomed at the time that the mystery trader was JPMorgan Chase, the US bank, or UK-based HSBC. The firms denied holding the position and the investor remains unknown.

Speculation, which has played a major role in rising food prices, is itself dependent on the supply of ready cash. Thus, a major reason for the surge in global prices is to be found in the Obama Administration’s monetary policy. The US has kept the federal funds interest rate, the rate at which banks charge each other for loans, as close to zero as possible. At the same time, it has undertaken unprecedented moves, called “quantitative easing,” to expand the money supply even further. These measures, which come on top of the vast government bailout that transferred trillions of dollars into US finance companies, have served to flood the market with cash, fueling speculation.

http://www.wsws.org/articles/2011/jan2011/food-j19.shtml

[Joanne98]

1. Speculators are driving up the prices of ALL commodities.

[Hannah Bell]

2. aided by the continued flow of money into their pockets because no one has the balls to do the

obvious: tax the fuckers.

[SpiralHawk]

3. Speculators (R) are indeed the cause

Think of them as you pay the piper at the supermarket:
Republicon Speculators are making Massive Profits off of
food, and getting SPECIAL FATCAT tax breaks.

It is going to get A LOT WORSE THIS YEAR, and onward...

Sounds like Republicon Socialism to me...Ptooooey.

[Jackpine Radical]

4. Yes, but think how much worse it would be if we had inflation.

I'm so glad that the non-volatiles, excluding food, fuel, etc. are staying down. I understand that there has been virtually no increase in the price of yachts valued at over $10 million in the past year, for example.

[shireen]

5. we must start farming locally, everywhere!

For countries with drought issues, there are ways to do intense water-conserving agriculture.

Our current system just isn't sustainable, and this is just another sign of things to come.