Food Price Spikes

Rapid economic growth in the developing world has been driving increases in basic commodity prices. One such commodity is food. This is mostly a sign of good things happening — people are getting richer and becoming more grain-intensive in their consumption (in part by moving up the food chain) — but it’s obviously a huge problem for people who remain poor. That’s causing political instability already in North Africa and will likely intersect with Egypt’s looming shame election.

A good rundown from Lester Brown suggests a few ways in which American policy is making things worse. Most notably, ethanol subsidies aren’t a good way to clean the environment, but they’re a great way of raising the price of agricultural commodities. Farmers like it, but people who need to eat suffer. Similarly, pro-sprawl and anti-density policies incentivize the redevelopment of farmland as exurbs. Nice if you’re an oil-exporter, not so nice if you eat food.

In the long run, higher prices will probably lead to higher crop yields and it’ll all even out. But in the interim expect hungry people and food riots.