Food Prices and Government Policy

One of the cardinal rules for a politician, particularly those from Washington, is to know the price of milk and eggs in a town that you're speaking in. Well, those numbers have been rising.

AP: "The U.S. is wrestling with the worst food inflation in 17 years, and analysts expect new data due on Wednesday to show it's getting worse. That's putting the squeeze on poor families and forcing bakeries, bagel shops and delis to explain price increases to their customers.

U.S. food prices rose 4 percent in 2007, compared with an average 2.5 percent annual rise for the last 15 years... Eggs cost 25 percent more in February than they did a year ago, according to the USDA. Milk and other dairy products jumped 13 percent, chicken and other poultry nearly 7 percent."

How does this happen? For everything, there is a cause and then effect. So, the effect is obviously rising food prices. The Cause? - Most of our food is home grown, so the dollar weakening on the global scale has a minimal impact on food prices at home. - Speculators playing the market? Not so much. Speculators buy 'futures', meaning they pay a fixed rate some time down the road for a certain amount of wheat/corn/rice/soy/peanuts. So paying to much and then trying to make a profit upon delivery is inefficient and a loosing proposition.
Just the same, the farmer doesn't want to undersell himself, and so he looks at the coming markets and attempts to make a profit. It's been this way for years and years, and nothing has changed except the market for the product. So the speculator is not to blame. - More demand? The 3 basic explanation for most price increases: Increased supply costs, Rising Demand, or Decreasing Availability. Growing costs have increased recently due to rising energy and water costs, coupled with Rising Demand and Decreasing Availability.

- Biofuels, Ethanol in particular. When Congress and W mandated a 500% increase in the use of biofuels, it was presented as a solution to a vastly overstated oil problem, a dream of growing all of our own fuel at home. No longer would ArcherDanielsMidland have sole control over the field, but soon Exxon Mobile Refineries would dot the landscape...
A couple of problems. Biofuels are inefficient compared to traditional gasoline, are difficult to transport, and only feasible in localized areas. They also require biomass, and the most readily available is that of Corn, Rice and Wheat. So, with they're fat government surplus checks in hand, the bio-manufacturers began buying massive quantities of food for the purpose of fuel. Seeing this and a rising demand for a product, the farmers jumped on board, and now 20% 0f corn acreage is devoted to ethanol. Thus, the price of corn in particular has risen, affecting everything from cows to chickens to pigs to turkeys, and a wide variety of livestock in between. So how did this get started? Liberal, Socialism mandates from the Feds. Thank you W.

Why else is their rising demand? The world is flat in an information sense, but is still opening up in a physical sense. As more and more products are shipped to more people and an ever rising population, the demand rises. China and India are the two most populous nations, and they are steadily rising in level of income and in imported material. This is also contributory to rising oil prices.

Still, this is marginal news for us. We'll grumble and then go have a bar-b-q. Or whatever it is you do in your neck of the woods.
"U.S. households still spend a smaller chunk of their expenses for foods than in any other country -- 7.2 percent in 2006, according to the USDA. By contrast, the figure was 22 percent in Poland and more than 40 percent in Egypt and Vietnam.

In Bangladesh, economists estimate 30 million of the country's 150 million people could be going hungry. Haiti's prime minister was ousted over the weekend following food riots there."

The rest of the world? Not so lucky. Once again, we can point to government interference in a market as the cause of many of these ills.

Restrictions on the amount of oil available, in the form or drilling moratorium and refusal to allow new Refineries in the US has all lead to expensive gasoline.

Mandates on Biofuels, a 500% increase, due to fears of global warming and oil dependency.

Those two causes are killing people abroad, while the elite liberals of the ivory towers sit complacent and congratulate themselves on a job well done, ignoring the real world consequences of Marxism.