Combating Rising Food PricesWise Blog Team
Are Food Prices Rising?
Every year the Food and Agriculture Organization of the United Nations (FAO) releases a report that details food prices and their predictions on whether food prices will rise or fall. Their predictions aren’t based on guesses or groundhog behavior, they are based on a landslide of data that has to do with things like weather, political climates, the economies of the world and population.
Last year’s report (the 2012 edition is forthcoming) reported that “high food prices are likely to continue and volatility may increase in coming years, making farmers, consumers and countries more vulnerable to poverty and food insecurity”. (You can read the full report here.)
Some factors are the increasing demand for food in fast-growing economies, increased biofuel production and population growth, production and transportation costs inflated by the rising price of oil, major currency fluctuations, and food trade and energy policies.
Of course, weather is a major factor and we don’t need climate experts to remind us that extreme weather is getting more common and the trend is expected to continue. Extreme weather anywhere in the world affects food everywhere in the world. Last year Russia and Argentina suffered crippling droughts, Australia and Canada suffered devastating rain. Business Week reported that 10 million acres of wheat farmland went unplanted in Saskatchewan while a cold, wet summer in the Midwest delayed the harvest and drove wheat prices up 74%. The corn harvest was not spared – prices soared over 87%. China’s wheat crop, the largest in the world, suffered from widespread drought that affected almost half the wheat production in Chinese provinces.
Even if the weather cooperates this harvest season, economists predict grain prices will keep rising because importers are speeding up purchases to outrun inflation. American commodities buyers are feeling the global pain because production of all grain-based products can’t keep up with demand.
Food Insurance to Control Costs
We can’t control the weather, we can’t control currency fluctuation and we have very little say when it comes to policy, fuel production and population growth. However, we do control our household budgets and prosperity plans. If food costs continue to rise, will we react by simply increasing the family’s food budget or will we take other steps to keep that budget steady?
Recently we’ve been discussing Urban Farming, which seems to be the new national pastime. And, it’s a good one. If you’re growing your own tomatoes, it’s just one more thing that you and Mother Nature control instead of you, Mother Nature, a commodities broker and a global transportation infrastructure. Another way to stabilize the budget and keep food costs neutral during a global spike (or unemployment!) is to keep a store of dehydrated or freeze-dried food that can be used to supplement fresh food. The right kind of freeze-dried food stays stable and retains good taste for up to 25 years. If you buy a store of food this year, you have the ability to have a meal in 2037 at $1.67 a serving instead of $2.67 a serving, which is where average inflation is taking food prices.
Keeping a store of dehydrated food need not only be for power outages and other emergencies. It can be used to keep your budget in your control.