How rising food prices are impacting the world
High grain costs, caused by severe drought, are hitting dinner tables from Guatemala to China. But the world has learned valuable lessons since the food shocks of 2008. Will it be enough to prevent social unrest?
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Now some see the same danger and disquiet gathering in world capitals as grain prices escalate once again. Except this time there's one key difference: so far, no panic.Skip to next paragraph
Nations around the world have learned some valuable lessons since 2008. More of them have been stocking their larders and preparing for a new global reality driven by increasingly erratic weather and growing demand.
This is not to say the latest droughts are having no impact around the world's dinner tables. Far from it. In countries where a 20 percent increase in the price of a loaf of bread or a sack of rice is often the difference between keeping children in school, setting a little money aside for emergencies, and staving off hunger, the political and social repercussions are still being felt.
Yet 2012 is providing a window into how far the world has come in dealing with the fluctuations of the weather and the interdependence of world food supplies – and how far it still needs to go. The pressures to improve the system will only increase. The planet is growing hotter and drier, and the global population stands at 7 billion and counting.
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Long gone are the days when the world's population was subject solely to the whims of local crops and climate. The green revolution of the 20th century, which generated spectacular increases in grain yields, and the advent of cheap shipping created a global food market that's transformed the lives of hundreds of millions of people.
But it also means that a bad year for farmers in the United States or Russia or Australia can ripple out quickly and become a disastrous year for consumers in Egypt or Indonesia.
Wassenaar knows all about the often vicious vicissitudes of agriculture. He's been through all this before, most notably with the drought in his inaugural year as a farmer, back when Dwight Eisenhower was president and "The Lawrence Welk Show" had just debuted on TV.
He's better equipped to cope with natural disasters today. In 1955, few farmers had crop-failure insurance. Today, 85 percent of them do. Drought-resistant corn had not yet been invented. And Wassenaar and many other farmers have diversified and now also plant soybeans, which have survived the summer in somewhat better shape than corn (though soybean prices are still at record highs because of the dry weather).
But it is corn that is the lifeblood of Iowa and much of American agriculture, not just for producers like Wassenaar, but for feedlots and poultry farms, ethanol refiners, and producers of cooking oils and cookies.
Corn prices have leapt by nearly 50 percent this summer, and US consumers and many farmers are feeling the effects.
The US Department of Agriculture foresees overall grocery prices rising by up to 4 percent in 2013. For some staples, the price rise will be steeper: Shane Ellis, a field specialist for the Iowa Beef Center at Iowa State University in Ames, predicts that choice meat cuts that currently cost $5 per pound will rise to $5.50, reflecting the higher cost of feed.
John Burkel, a farmer in Badger, Minn., is already taking action. He's canceled an order for 12,000 young turkeys. He says taking on a larger flock doesn't make sense economically unless he can raise selling prices. And he repeats an enduring lament of ranchers and poultry farmers who believe they're at a disadvantage without any government protection.