Food Prices: A Problem Without A Solution

Commodities & Metals

Published: March 4, 2011 5:52 am

Last Updated: March 4, 2011 6:43 am

IMF researchers believe that high food prices are a problem which will linger, at least in the foreseeable future. Bad weather is part of the reason. The growth in bio-fuels in another.

The IMF report has conclusions similar to those made by the UN Food and Agricultural Organization. The FAO said that food prices were up 2.2% last month. That puts them at a 20-year high or an all-time high depending on the method of measurement. The FOA blames high oil prices among other things for the increase. Gasoline is essential to the transportation of crops.

Whatever the cause, there is no solution that would bring food prices down in sight. As with any other major global problem, the world’s most powerful nations think they can find one. Economic power can reverse nearly any dangerous trend which threatens the world’s financial order and situations which menace global political stability. In the case of the food shortage, however, there is no amount of brain power, capital, or cooperation among nations that can break the cycle of the rising prices for agricultural commodities.

Crop yields will not improve now and may not for years. Cold weather has hurt production of fruits and grains in warmer regions. Most of the under-developed world has no access to hearty seeds, advanced farming and equipment, irrigation technology or the ability to rotate crops or keep land fallow.

The US no longer can afford to export huge amounts of grain to needy nations, even if it has the supply. The move toward austerity has made it nearly certain that the “world’s bread basket” will not be accessible.

The UN says high food prices pushed 44 million people into poverty the last half of 2010. That number will grow sharply this year. Food shortages will become worse. The credit crisis, the great recession, sovereign debt, and trade and currency battles among countries will begin to look like insignificant problems. The starving world cannot be one at peace under any circumstance

Douglas A. McIntyre

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