Why your food is costing more money

Sen. Chuck Grassley, a Republican from another big corn and ethanol state, Iowa, said, “The marketplace is responding by having the highest (number of) acres put into corn since 1944. So farmers are showing the ability to produce more, and to moderate any price increases.”

Price of bread vs. price of water
Grassley added, “I don’t think any consumer ought to be complaining about the price of bread when they’re willing to pay four dollars for a gallon of water.”

The Iowa Republican said he hasn’t yet a seen “a mass crusade” of pork and poultry producers in his state complaining about the cost of corn and soybeans, because most Iowa farmers raise corn, soybeans, and livestock.

“I think it has caused an outcry more from people who’ve gone just to livestock farming, like the factory-type hog producers,” Grassley said. “We don’t have maybe enough sympathy for them because we see them to some extent driving maybe 25,000 pork producers in Iowa out of business. If you go back 15 years, we had over 30,000 producers and today I think we have under 10,000.”

The increase in the price of agricultural commodities and the potential for shortages is being felt in places far from Iowa.

Countries curbing exports
According to Reuters, Argentina, the world's fourth largest wheat exporter, has imposed a ban on wheat exports until April 8, in order to, in the words of the country’s Agriculture Secretariat, “keep local supplies from being affected.”

Video   Hard times at the grocery store March 10: With transportation costs going up and a weak dollar, food prices are going up, too. NBC's Peter Alexander reports. Nightly News

Bolivia, Honduras, and Pakistan have banned wheat or corn exports, while China has imposed or increased export taxes on wheat, corn, barley, oats and soybeans, in order to deter exports of those commodities.

“Agricultural commodity prices rose sharply in 2006 and continued to rise even more sharply in 2007,” the UN’s Food and Agricultural Organization (FAO) reported last month.

The FAO said “what distinguishes the current state of agricultural markets is the concurrence of the hike in world prices of not just a selected few, but…nearly all major food and feed commodities.”

The FAO also noted the possibility “that the prices may continue to remain high after the effects of short-term shocks dissipate.”

While higher prices for beer and turkey may be an annoyance or even a hardship for some Americans, the situation is worse for some people in places such as Indonesia and Cameroon.

Impact on UN food aid program
Last week, in a speech to the European Parliament Development Committee, Josette Sheeran, the Executive Director of the UN World Food Program, said her agency now faces a $500 million shortfall “just due to soaring food and fuel costs — up more than 40 percent since (last) June — which will lead to ration cuts unless we receive additional help soon.”

She added that “high food prices have created an urgent situation throughout many developing countries and have directly hit WFP’s ability to respond to those needs.”

Sheeran noted that in some countries food was available, but cost too much for the poor to buy it, or, as she put it “markets full of food with scores of people simply unable to afford it. These conditions have triggered food riots from Cameroon to Burkina Faso to Indonesia to Mexico and beyond.”

Food, she reminded the European Parliament, is a geostrategic issue, just as oil is.

“This challenge may be one of the most critical peace and security issues of our time. Fragile democracies are feeling the pressure of food insecurity; food riots have erupted throughout the globe,” she said.

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