Gold and Silver at up dramatically in the last year. Food prices are up dramatically.
The World Bank Development Prospects Group shows food price changes Q1 2010 to Q1 2011
| Increase | |
| Maize (corn) | 74% |
| Wheat | 69% |
| Soybeans | 36% |
| Beef | 36% |
| Rice | -2% |
If food is 10% of your expenses and food overall has inflation of 30% that only increases your expenses 3%. If food is 50% of your income and goes up 30% that increases your expenses 15%. In the USA people spend about 10% disposable income on food (much of that though is really processing the food not the raw material). Spending in Japan on food is 19%, France 16%, China 33% and India 46%. 50% if what most of the people in the world spend. Those people are poor and don’t have the resources to pay more. This is why food prices are so critical. Governments fall from such rises in basic food prices. Also remember even in a country like the USA, where the average is 10% nearly 30% of people spend over 20% of disposable income on food. There are large variances not only between countries but within countries.
What matter most is local food prices, but global food prices impact the prices in countries. Though many governments subsidize food prices – when food costs more than 30% of people’s income I think not doing so (when prices rise dramatically) would be crazy. When food costs 5% the government really doesn’t need to be involved.
Inflation is a serious threat to economies in the next few years. Food inflation for non-rich countries is a huge problem now.
Related: Food and Energy Costs July 2008 – Food Price Inflation is Quite High – You Can Help Reduce Extreme Poverty – Creating a World Without Poverty – Ethanol: Science Based Solution or Special Interest Welfare
Food Price Watch by the World Bank
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Recent United States Department of Agriculture (USDA) estimates show the share of ethanol for fuel rising from 31% of U.S. corn output in 2008/9 to a projected 40% in 2010/11. Increased demand for high fructose corn syrup from countries such as Mexico, as they substitute away from higher priced sugar, also contributes to higher demand for corn. Prospects of easing in this market depend partly on the size of the crops in Latin America, particularly Argentina
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In India, food inflation stood at 18.3% in December partly due to the higher prices of fruits and vegetables, milk, meat, and fish. In China, similarly, food inflation was driven largely by vegetables. In the second half of 2010, beans prices increased dramatically in Burundi (48%), Cameroon (43%), Kenya (38%), and Uganda (22%). In Mongolia, an outbreak of the foot and mouth disease, coupled with a severe winter experienced in 2010, led to a sharp increase in meat prices. Average mutton meat prices were 32% higher in 2010 compared to 2009.
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Our results show that extreme poverty in low- and middle-income countries may have increased by 44 million people in net terms as a result of the food price increases between June and December 2010.