Healthy soil and sustainable growing

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Food prices rising across the world
updated 3:08 a.m. EDT, Tue March 25, 2008
http://www.cnn.com/2008/WORLD/americas/03/24/food.ap/index.html

MEXICO CITY, Mexico (AP) -- If you're seeing your grocery bill go up, you're 
not alone.

>From subsistence farmers eating rice in Ecuador to gourmets feasting on 
>escargot in France, consumers worldwide face rising food prices in what 
>analysts call a perfect storm of conditions. Freak weather is a factor. But 
>so are dramatic changes in the global economy, including higher oil prices, 
>lower food reserves and growing consumer demand in China and India.

The world's poorest nations still harbor the greatest hunger risk. Clashes 
over bread in Egypt killed at least two people last week, and similar food 
riots broke out in Burkina Faso and Cameroon this month.

But food protests now crop up even in Italy. And while the price of spaghetti 
has doubled in Haiti, the cost of miso is packing a hit in Japan.

"It's not likely that prices will go back to as low as we're used to," said 
Abdolreza Abbassian, economist and secretary of the Intergovernmental Group 
for Grains for the U.N. Food and Agriculture Organization. "Currently if 
you're in Haiti, unless the government is subsidizing consumers, consumers 
have no choice but to cut consumption. It's a very brutal scenario, but 
that's what it is."

No one knows that better than Eugene Thermilon, 30, a Haitian day laborer who 
can no longer afford pasta to feed his wife and four children since the price 
nearly doubled to $0.57 a bag. Their only meal on a recent day was two cans 
of corn grits.

"Their stomachs were not even full," Thermilon said, walking toward his pink 
concrete house on the precipice of a garbage-filled ravine. By noon the next 
day, he still had nothing to feed them for dinner.

Their hunger has had a ripple effect. Haitian food vendor Fabiola Duran 
Estime, 31, has lost so many customers like Thermilon that she had to pull 
her daughter, Fyva, out of kindergarten because she can't afford the $20 
monthly tuition.

Fyva was just beginning to read.

In the long term, prices are expected to stabilize. Farmers will grow more 
grain for both fuel and food and eventually bring prices down. Already this 
is happening with wheat, with more crops to be planted in the U.S., Canada 
and Europe in the coming year.

However, consumers still face at least 10 years of more expensive food, 
according to preliminary FAO projections.

Among the driving forces are petroleum prices, which increase the cost of 
everything from fertilizers to transport to food processing. Rising demand 
for meat and dairy in rapidly developing countries such as China and India is 
sending up the cost of grain, used for cattle feed, as is the demand for raw 
materials to make biofuels.

What's rare is that the spikes are hitting all major foods in most countries 
at once. Food prices rose 4 percent in the U.S. last year, the highest rise 
since 1990, and are expected to climb as much again this year, according to 
the U.S. Department of Agriculture.

As of December, 37 countries faced food crises, and 20 had imposed some sort 
of food-price controls.

For many, it's a disaster. The U.N.'s World Food Program says it's facing a 
$500 million shortfall in funding this year to feed 89 million needy people. 
On Monday, it appealed to donor countries to step up contributions, saying 
its efforts otherwise have to be scaled back.

In Egypt, where bread is up 35 percent and cooking oil 26 percent, the 
government recently proposed ending food subsidies and replacing them with 
cash payouts to the needy. But the plan was put on hold after it sparked 
public uproar.

"A revolution of the hungry is in the offing," said Mohammed el-Askalani of 
Citizens Against the High Cost of Living, a protest group established to 
lobby against ending the subsidies.

In China, the price hikes are both a burden and a boon.

Per capita meat consumption has increased 150 percent since 1980, so Zhou 
Jian decided six months ago to switch from selling auto parts to pork. The 
price of pork has jumped 58 percent in the past year, yet every morning 
housewives and domestics still crowd his Shanghai shop, and more customers 
order choice cuts.

The 26-year-old now earns $4,200 a month, two to three times what he made 
selling car parts. And it's not just pork. Beef is becoming a weekly 
indulgence.

"The Chinese middle class is starting to change the traditional thought 
process of beef as a luxury," said Kevin Timberlake, who manages the 
U.S.-based Western Cattle Company feedlot in China's Inner Mongolia.

At the same time, increased cost of food staples in China threatens to wreak 
havoc. Beijing has been selling grain from its reserves to hold down prices, 
said Jing Ulrich, chairwoman of China equities for JP Morgan.

"But this is not really solving the root cause of the problem," Ulrich said. 
"The cause of the problem is a supply-demand imbalance. Demand is very 
strong. Supply is constrained. It is as simple as that."

Chinese Premier Wen Jiabao says fighting inflation from shortages of key 
foods is a top economic priority. Inflation reached 7.1 percent in January, 
the highest in 11 years, led by an 18.2 percent jump in food prices.

Meanwhile, record oil prices have boosted the cost of fertilizer and freight 
for bulk commodities -- up 80 percent in 2007 over 2006. The oil spike has 
also turned up the pressure for countries to switch to biofuels, which the 
FAO says will drive up the cost of corn, sugar and soybeans "for many more 
years to come."

In Japan, the ethanol boom is hitting the country in mayonnaise and miso, two 
important culinary ingredients, as biofuels production pushes up the price of 
cooking oil and soybeans.

A two-pound bottle of mayonnaise his risen about 10 percent in two months to 
as much as 330 yen (nearly $3), said Daishi Inoue, a cook at a Chinese 
restaurant.

"It's not hurting us much now," he said. "But if prices keep going up, we 
have no choice but to raise our prices."

Miso Bank, a restaurant in Tokyo's glitzy Ginza district, specializes in food 
cooked with miso, or soybean paste.

"We expect prices to go up in April all at once," said Miso Bank manager 
Koichi Oritani. "The hikes would affect our menu. So we plan to order miso in 
bulk and make changes to the menu."

Italians are feeling the pinch in pasta, with consumer groups staging a 
one-day strike in September against a food deeply intertwined with national 
identity. Italians eat an estimated 60 pounds of pasta per capita a year.

The protest was symbolic because Italians typically stock up on pasta, buying 
multiple packages at a time. But in the next two months pasta consumption 
dropped 5 percent, said farm lobbyist Rolando Manfredini.

"The situation has gotten even worse," he said.

In decades past, farm subsidies and support programs allowed major grain 
exporting countries to hold large surpluses, which could be tapped during 
food shortages to keep prices down. But new trade policies have made 
agricultural production much more responsive to market demands -- putting 
global food reserves at their lowest in a quarter century.

Without reserves, bad weather and poor harvests have a bigger impact on 
prices.

"The market is extremely nervous. With the slightest news about bad weather, 
the market reacts," said economist Abbassian.

That means that a drought in Australia and flooding in Argentina, two of the 
world's largest suppliers of industrial milk and butter, sent the price of 
butter in France soaring 37 percent from 2006 to 2007.

Forty percent of escargot, the snail dish, is butter.

"You can do the calculation yourself," said Romain Chapron, president of 
Croque Bourgogne, which supplies escargot. "It had a considerable effect. It 
forced people in our profession to tighten their belts to the maximum."

The same climate crises sparked a 21 percent rise in the cost of milk, which 
with butter makes another famous French food item -- the croissant. Panavi, a 
pastry and bread supplier, has raised retail prices of croissants and pain au 
chocolat by 6 to 15 percent.

Already, there's a lot of suspicion among consumers.

"They don't understand why prices have gone up like this," said Nicole 
Watelet, general secretary at the Federation of French Bakeries and Pastry 
Enterprises. "They think that someone is profiting from this. But it's not 
us. We're paying." Food costs worldwide spiked 23 percent from 2006 to 2007, 
according to the FAO. Grains went up 42 percent, oils 50 percent and dairy 80 
percent.

Economists say that for the short term, government bailouts will have to be 
part of the answer to keep unrest at a minimum. In recent weeks, rising food 
prices sparked riots in the West African nations of Burkina Faso, where mobs 
torched buildings, and Cameroon, where at least four people died.

But attempts to control prices in one country often have dire effects 
elsewhere. China's restrictions on wheat flour exports resulted in a price 
spike in Indonesia this year, according to the FAO. Ukraine and Russia 
imposed export restrictions on wheat, causing tight supplies and higher 
prices for importing countries. Partly because of the cost of imported wheat, 
Peru's military has begun eating bread made from potato flour, a native crop.

"We need a response on a large scale, either the regional or international 
level," said Brian Halweil of the environmental research organization 
Worldwatch Institute. "All countries are tied enough to the world food 
markets that this is a global crisis."

Poorer countries can speed up the adjustment by investing in agriculture, 
experts say. If they do, farmers can turn high prices into an engine for 
growth.

But in countries like Burkina Faso, the crisis is immediate.

Days after the riots, Pascaline OuÄedraogo wandered the market in the 
capital, Ouagadougou, looking to buy meat and vegetables. She said a good 
meal cost 1,000 francs (about $2.35) not long ago. Now she needs twice that.

"The more prices go up, the less there is to meet their needs," she said of 
her three children, all in secondary school. "You wonder if it's the 
government or the businesses that are behind the price hikes."

IrÇene Belem, a 25-year-old with twins, struggles to buy milk, which has gone 
up 57 percent in recent weeks.

"We knew we were poor before," she said, "but now it's worse than poverty."