More Food Riots?

Bill Lapp, president of the US food industry consultants Advanced Economic Solutions. “The increased cost of food is somewhere near $30bn in the past year. That has not been passed on to the consumer yet,” he said. “At some point, food manufacturers, restaurants, grocers and livestock producers and others in the middle of the chain will pass that on.”

Although UN food price index remains near record levels, in the west, slow growth and stagnant incomes have been a brake on price increases. In the US, consumer prices for food eaten at home have gained 5.4 per cent in the past 12 months. Food price inflation looks set to continue as a threat into 2012 as expectations for the US corn harvest, the world’s largest, are being lowered by the week. The US accounts for half the world’s corn exports and the size of the crop has an outsize impact on global prices. The price of corn is on the upswing. Corn is also a critical feeding commodity, so a smaller crop would push prices higher, rapidly translating into more expensive beef, lamb, pork and poultry and thus, higher food inflation.

The rising cost of food could heighten social pressures and force central bankers to raise interest rates.

Taken from here