Thankfully none of this is considered CPI by government statisticians and the Federal Reserve so they can continue to play make believe about the problems facing the average consumer. These projections for food price increases say nothing about other inflationary pressures that already exist in the system but have not fully manifested themselves. If sovereign debt (particularly in the U.S. with reserve currency status) continues to be monetized, this will devalue the currency and cause the price of food to rise even more. With an unfriendly global attitude toward carbon based fuels as well, you can expect more taxes and restrictions on the fuel that is used to produce and transport the global food supply adding even more cost. From a credit standpoint, unless the financial system unfreezes and begins lending again, farmers and producers will not get credit to expand their operations putting even more upward pressure on the cost of food. In the next decade food is going to consume more and more personal income, leading to less discretionary spending furthering the downward economic spiral. Our leaders seem to actually be hastening this decline.
Growing demand from emerging markets and for biofuel production will send prices soaring, according to the OECD and the UN Food and Agriculture Organisation.
Food prices are set to rise as much as 40% over the coming decade amid growing demand from emerging markets and for biofuel production, according to a United Nations report today which warns of rising hunger and food insecurity.
Farm commodity prices have fallen from their record peaks of two years ago but are set to pick up again and are unlikely to drop back to their average levels of the past decade, according to the annual joint report from Paris-based thinktank the OECD and the UN Food and Agriculture Organisation (FAO).
The forecasts are for wheat and coarse grain prices over the next 10 years to be between 15% and 40% higher in real terms, once adjusted for inflation, than their average levels during the 1997-2006 period, the decade before the price spike of 2007-08. Real prices for vegetable oils are expected to be more than 40% higher and dairy prices are projected to be between 16-45% higher. But rises in livestock prices are expected to be less marked, although world demand for meat is climbing faster than for other farm commodities on the back of rising wealth for some sections of the population in emerging economies.
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