WORST FOOD PRICE INFLATION IN HISTORY

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LESTER BROWN, ENS - The world is facing the most severe food price
inflation in history as grain and soybean prices climb to all-time
highs. Wheat trading on the Chicago Board of Trade on December 17th
breached the $10 per bushel level for the first time ever. In
mid-January, corn was trading over $5 per bushel, close to its historic
high. And on January 11th, soybeans traded at $13.42 per bushel, the
highest price ever recorded. All these prices are double those of a year
or two ago.

As a result, prices of food products made directly from these
commodities such as bread, pasta, and tortillas, and those made
indirectly, such as pork, poultry, beef, milk, and eggs, are everywhere
on the rise. In Mexico, corn meal prices are up 60 percent. In Pakistan,
flour prices have doubled. China is facing rampant food price inflation,
some of the worst in decades. . .

From 1990 to 2005, world grain consumption, driven largely by population
growth and rising consumption of grain-based animal products, climbed by
an average of 21 million tons per year. Then came the explosion in
demand for grain used in U.S. ethanol distilleries, which jumped from 54
million tons in 2006 to 81 million tons in 2007. This 27 million ton
jump more than doubled the annual growth in world demand for grain. If
80 percent of the 62 distilleries now under construction are completed
by late 2008, grain used to produce fuel for cars will climb to 114
million tons, or 28 percent of the projected 2008 U.S. grain harvest.
Current ethanol production is primarily from the starch in kernels of
field corn. . .

The World Bank reports that for each 1 percent rise in food prices,
caloric intake among the poor drops 0.5 percent. Millions of those
living on the lower rungs of the global economic ladder, people who are
barely hanging on, will lose their grip and begin to fall off.

http://www.ens-newswire.com/ens/jan2008/2008-01-25-insbro.asp

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