March 30, 2008
MONTPELIER, Vt.—Whether making bread for a living or merely shopping for it at the supermarket, Vermonters are feeling the brunt of sharply rising prices for grains and other food products.
“I shop around. I look for deals,” said Pat Lesure, a state employee who was shopping at the Price Chopper in Berlin on Friday. “But it’s a struggle now. It really is.”
Food prices were up 4 percent in 2007 the largest jump in nearly two decades, according to the U.S. Bureau of Labor Statistics, after rising 2.4 percent in both 2005 and 2006.
The bureau reports that the price of bread is up 30 percent since February 2006. The national average price for a dozen eggs is up 84 cents, to $2.17. Orange juice is up to an average of $2.53 for 12 ounces of frozen concentrate, from less than $1.90 two years ago.
Price increases are being felt at the wholesale level as well.
Paul Manghi, owner of Manghi’s Bread in Montpelier, said he had been forced to raise his wholesale prices by 11 percent because of the rising cost for ingredients.
“Things like sunflower oil and spelt flour have gone up in the range of 50 percent,” he said. “And wheat flour has gone up more than 200 percent.”
“We just make what we make, and any cost increase we experience we just have to pass on to the customer,” Manghi added. “We don’t know yet how people will react to this, but so far we haven’t seen any negative impacts.”
Another 4 percent jump in food prices is forecast for this year, said Ephraim Leibtag, an economist with the Economic Research Division of the U.S. Department of Agriculture.
“This is the largest increase in recent memory,” he said. “Since the 1990s food prices and inflation have been so stable, and thats why this increase is getting so much attention now.”
At Norwich-based King Arthur Flour, spokeswoman Allison Furbish said increased exports, higher fuel costs and farmers converting wheat fields to corn for ethanol production are combining to send wheat prices spiraling upward.
King Arthur has posted a notice prominently on its Web site describing the situation. “People are going to notice price increases, and we feel its important for them to understand why,” Furbish said.
A 5-pound bag of flour that cost $2.89 a year ago will be up to $4.99 by April, she said.
Guardians Thailand correspondent Ian MacKinnon writes about an amazing new feature of the upcoming shortage – rice rustling. While the shortage was taking over the world, rice was the commodity least affected. However the price of the ton of rice has gone from $400 mln to $760. Thai farmers now have to protect their crop with the guns against the thieves.
Governments in Asia taking all the measures to protect their 2.5 bn people from hunger and avoid food riots. Exports have been banned or diminished in order to keep food in the country. More production was encouraged, however the hopes are fading, as India has failed to become the rice exporter.
“The real danger with rising rice prices is that the ‘working poor’ will simply be pushed into the category of ‘poor’ who will look to us to feed them,” said Paul Risley, spokesman for WFP Asia. “There are hundreds of millions living at, or just below, the poverty line of $1-a-day, spending 70% of their day-labour wages on food.
As Amit Battacharaya writes from the New Delhi India has to focus on the internal food production with Thailand and Vietnam failing to provide much needed food imports. Era of the cheap food is over with the credit crunch so it is time to tighten the belts, author concludes.
Daily Reckoning has written a huge spread article to lead the reader to conclusion that the restriction of the rice exports will damage the markets and lead to the global inflation. However seriously it sounds, it is hard to agree with the point made by the magazine.
What causes inflation? Essentially it is a reciprocal process with each member of the economic system being responsible. Product producer sets a higher price to get more profit, retailer adds his markup and passes it over to the customer. Customer now need more money in order to buy other products, so he demands a higher salary for the same amount of labour. Higher salary has to be paid for by the clients of the company, so again producer has to increase the product price. This is an oversimplified example, which however illustrates the point.
Inflation can be tackled by increasing productivity – if you want to get more, you have to produce more. In the economical system you need money to start production, as you have to buy raw matherials, pay salaries and have other expenses. By paying salaries you create new customers for the market, as people have to buy in order to live in the society. Here we come to the point made by the Daily Reckoning.
We live in the world economy today. There is always a chance that the product can be produced in the country A cheaper than in the country B. Country A can then come to the market of the country B and sell its product cheaper, while still making a profit. Country B has to wrap the production of the product as it is not competitive anymore. Therefore businesses have to fire people thus diminishing the number of the clients on the market.
There is another upside to this – food security. In case with rice it is vital to ensure there is always enough of it for the market. If country A controls 50% of the rice market of the country B, it is hard to see how people are going to get along if A fails to produce enough rice one year.
This is all for today! Have a good appetite:)
By Daniel Ten Kate; commentary by Les Blough, Editor
Mar 29, 2008, 20:51
Editor’s Comment: It’s interesting to note how “analysts” quoted in this Christian Science Monitor article, attempt to blunt the crisis by telling us that food shortages aren’t as bad as they seem – not as bad as they have been in the past. Moreover, they provide a 3-fold explanation for the current food crisis:
“These factors, combined with a falling US dollar, steadily rising demand from developing countries, and biofuel policies that mop up excess cereal production, have all helped boost world prices.”
Biofuel policies that “mop up excess cereal production”? If only “excess” grains are used to make fuel for cars, how are they contributing to a food shortage? CSM also blames “Surging oil prices (in turn, boosting fertilizer and transport costs) combined with a drop in production due to droughts in Australia and the Ukraine have helped to drain global food stocks.”
This corporate media rendition bears part of the truth, but without context. We must ask, “Why is the dollar falling? … Why are oil prices surging? They also throw in honorable mention for blame to “droughts in Australia and the Ukraine”, but we won’t go there and begin talking about global warming.
Who are “those who want to make an easy buck” in CSM’s vague suggestion that local officials in various countries are culpable for the shortages as they profit when their fellow countrymen go hungry. Nowhere in this corporate media article is the blame laid at the feet of the capitalist speculators on the price of grain and the price of oil who bear utmost responsibility for food prices and shortages around the world. The time has long passed for a hard look at the system: Capitalism.
“Capitalism is an inherently distorted system that will always foster hunger, poverty and deprivation. The general structure of capitalism perpetually reproduces misery, and this is particularly the case with the current neo-liberal phase of capitalism.”
– José Vicente Rangel, former
“[Under capitalism], poverty, hunger, the destruction of the peoples of the land and the destruction of the environment have increased in the world.”
– Raúl Castro
President of Cuba
And as President Hugo Chavez Frias stated of Venezuela:
“within the limits of capitalism, the problems of misery, poverty and inequality that Venezuelans face, cannot be solved.”
– Les Blough, Editor
HANOI: Vietnam will cut rice exports this year in an effort to secure domestic supplies and stabilise skyrocketing food prices now driving double-digit inflation, the government said on Friday.
The communist government also cut its economic growth target to 7.5 percent for this year — down from last year’s 8.5 percent and an earlier target of up to nine percent for 2008 — and announced a 10-percent cut in public spending.
Prime Minister Nguyen Tan Dung has capped exports of the staple grain rice at 3.5 million tonnes this year, down from a previous target of 4.5 million tonnes, said a statement on the government’s official website.
Vietnam is the world’s second largest rice exporter and its farmers have benefited from fast-rising grain prices on the international markets, but domestic consumers have suffered as prices have shot up. Amid low global stocks and high prices, the Philippines has secured a commitment from Vietnam for 1.5 million tonnes of rice this year, barring natural disasters or unexpected harvest losses, its agriculture ministry said.
Inflation in Vietnam has topped 16 percent in the first quarter, government data showed this week, in a trend that has fuelled popular anger and an ongoing spate of labour strikes in the country of 86 million people.
Vietnam’s government, in a top-level meeting on fighting inflation and other economic woes, decided to freeze prices of 10 essential goods until June, also including electricity, coal and retail fuel, the website said.
The Vietnam Food Association has tightened rules on rice export contracts, telling exporters they must not exceed the average of the past two years. “The regulation aims to find a better balance between production and exports, so as to balance local prices and guarantee food security,” said Huynh Minh Hue, deputy general secretary of the association.
In the first quarter of 2008, Vietnam exported 859,000 tonnes of rice worth 366 million dollars, up 5.3 percent in quantity and 42.6 percent in value, according to the state-run General Statistics Office.
The government meeting this week also discussed Vietnam’s other economic challenges — including a widening trade deficit, a falling stock market, and lower growth projections for the year.
“We are facing quite a bad situation,” said Deputy Prime Minister Nguyen Sinh Hung, according to news website VNExpress. “The world economy is declining, but we have to be calm.” Hung said the government will require ministries and agencies to economise, cutting about 10 percent of regular spending, the report said.
“These economic difficulties will last for about one year and we have to accept high inflation levels … In the current situation I think reaching economic growth of 7.5 percent for the year would be high.” afp
Today we start off with Vietnam, which would face the crisis on its rice market, as it would be forced to stop exporting rice, due to production shortages. “More than 500,000 hectares (1.2 million acres) of farmland had been converted between 2001 and 2007, and last year alone 125,000 hectares of rice fields had been lost, he reportedly said.” – source.
According to top food experts in China, the country is entering in the phase of the food dependence on imports. Experts have also agreed that the food prices will keep rising and liquidity in the commodity markets will only fuel them. Read the report here.
Kenya is facing the food crisis despite the heavy rains. Difficult political situation made it impossible for the country to import fertilizers in order to grow crops and led to the shortage. Full report is here.
Yesterday (22 of March) the whole Kazakhstan has been celebrating the Nauriz – New Year in the most of the Central Asia. We have had the events in the whole country and the Old Square in my hometown Almaty was blocked by the maket of Otirar – ancient city that has resisted the Chingis Khan for 6 months.
I had a day out with my friends, it has seemed that the whole city is partying. However strange it is, I stopped to talk to the grocery sellers on the main street of the city. Well, we have tomatoes for 2 pounds and cucumbers for 1 pound. They told me they are rising prices because of the holiday – because wholesale markets are doing the same. Customers are the ones worst affected, but farmers are happy.
Meanwhile the price of the piece for bread in some regions of the Russia is reaching 50 p, which is a lot as it used to be around 10-15p.
Happy Holidays to everyone!
Today we can view Africa being affected by the crisis. Food prices go up tremendously and there is no doubt the world has to prepare for the worst. “But this could be the blessing in disguise if it makes governments eliminate the trade barriers.” – writes Karoline Boin from Kampala. The poorest countries impose bans on food exports to protect their citizens, but the greed affects the overall food prices and makes everyone lose. More here.
Another article by Elias Biryabarema and Andrew Bagala focuses on Uganda. Monthly food bils have almost doubled for the people in the towns and villages during the last three months. Official sources such as the Bank of Uganda and Bureau of Statistics reported only a steep rise of 1 percent due to the shortage of the supply on the markets. More here.
Today we have a whole new set of articles including North Korea as the new place for the crisis. We have two reports from different correspondent giving more background and analysis to the situation.
Indonesia is facing a social unrest as a food prices rise to the unprecedented level and hurt the poor, who constitute almost the half of the 220 million population and live on less than 2$ a day. According to government statistics, in the past year cooking oil has risen nearly 40 percent, rice is up 25 percent and tofu, a staple of the Indonesian diet, has gone up by 50 percent. More here.
Meanwhile Tara Parker Pop from New York Times presents us the book called “Eat this, not That” by David Zinczenko. The book tells us about the worst foods which should be avoided. Read here.
North Korea, which has had problems with food and relied on foreign nations to feed its citizens since mid 90s, now faces a worsening of the crisis, according to AP South Korea. 11 percent of the country’s crops have been destroyed in the severe floods last summer and now people of the country are experiencing shortage. Source.
Business Standard correspondent Poonam Munjal from New Delhi gives a good overview of the events in his report which could be read here.
Katherine Corcoran from the Chicago Tribune, based in Mexico City, starts off speaking about the rising food prices and the reasons for that and finishes by showing the attempts of the governments to tackle the crisis. Using the contributions of the AP correspondents worldwide she shows how the crisis affects ordinary poor and middle class people and how the farmers profit. Three page report can be read here.
Finally, we have a surprising report from The Independent, London, which is named “It’s crazy to ignore benefits of GM food, says ‘Country Life'”. Apparently the “Country Life” magazine has become pro GM (genetically modified) food using the rising world population and the crisis to justify its position. In its editorial “Country Life” accuses the enemies of the GM food of ignorance and irrational fear. Article from The Independent here. Article from the “Country Life” here.
Updated Sun. Mar. 16 2008 12:33 PM ET
Parminder Parmar, CTV.ca News
The United Nations’ largest emergency food program is facing a “perfect storm” of problems in getting help and food to more than 73 million of the world’s poorest people.
The increased food costs have left the World Food Program (WFP) with a US$500-million shortfall in its $2.9-billion budget for this year.
UN officials say they’re desperately trying to make sure they’ll be able to help millions of children and families around the world that depend on the program. They say they urgently need help from Ottawa and ordinary Canadians.
“It’s really important that we get the money, so we don’t have to do ration cuts or (cuts to) the number of people we have to reach this year,” WFP spokesperson Bettina Luescher told CTV.ca in a telephone interview from New York.
“You and I see the price of bread and pasta going up and we may skip one night out, but elsewhere they’re regularly skipping meals.”
Food prices have skyrocketed in recent years due to a number of factors, including:
Rising transportation costs due to fuel price hikes
Bad harvests due to droughts
Economic boons in developing countries that have led to increased staple demands
Agricultural shifts towards biofuel rather than food production
The dropping price of the U.S. dollar is adding to the problem because it’s the global currency used for food purchases. The greenback’s declining buying power means the WFP is not able to purchase as much food.
“We are also seeing more need,” says Luescher. “People are being priced out of the market. They were poor but were able to still buy food. But now, there’s food on the shelves in the markets, but people can’t afford it any more.”
According to the WFP:
About 1 billion people still live on less than $1 a day, the threshold for the definition of “absolute poverty”
170 million children are undernourished
Crop-yield losses are expected in 40 developing countries in the coming years
In the past, countries like the United States would chip in directly with food donations from excess food grown by farmers. But because demand has grown and prices have shot up, “the era of surplus food is over,” says Luescher.
In Afghanistan alone — where Canadian soldiers are helping to secure the war-torn country — an additional 2.5 million people will need help because wheat prices have shot up by as much as 67 per cent.
Canada is among the WFP’s biggest donors, but Luescher says Canadians need to give even more help now, so that the WFP isn’t forced to leave children and families hungry.
Luescher is calling on Canadians to write MPs and the government and ask them to provide more money to help the program this year. She’s also hoping that ordinary Canadians and students get involved by holding fundraisers. She says global poverty issues may seem overwhelmingly large, but individuals can make a difference.
“People have this wrong concept that they can’t help, but they can. Feeding a child in school for a day costs 25 cents. (A quarter) gives them an education — they can concentrate, and it’s one of the best long term investments for the future,” Luescher added.
Sun Mar 16, 2008 4:57am EDT
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JAKARTA (Reuters) – About 500 Indonesian Muslims took to the streets of the capital to demand the government bring down food prices after media reports of cases of starvation.
The protesters, from the Muslim group Hizbut Tahrir Indonesia, marched through Jakarta’s main streets to the presidential palace, chanting “Allahu Akbar” (God is Great).
The Surya newspaper said a schoolboy in East Java, who lived with his elderly grandmother in Magetan district, hanged himself in February because he could not bear the pain of starvation. Neighbors said the family was very poor.
Detik.co, news Web site earlier this month reported that a pregnant woman who lived in a rented room with her three children died because she had not eaten for three days.
“People have died of hunger, babies are suffering from severe malnutrition because they can’t get proper treatment,” Hizbut Tahrir spokesman, Muhammad Ismail Yusanto, told Reuters Television.
“How is it possible that in an agricultural nation that has been independent for more than 60 years, many people have died of hunger?”
Soaring global prices of rice and other staples are hitting Asia’s poorest citizens. (Reporting by Reuters Television; Writing by Ade Mardiyati; Editing by Ahmad Pathoni)
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