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Why is the Cost of Food So High?

Aug 20, 2008
Prices are rising and supplies are tightening, for a number of reasons. We are seeing food prices increasing at their highest rate in years. The price of food is subject to the cost of production and the recent concern of rising oil prices and fertilizer prices is having a big influence. The increasing price of food is moving at a faster rate than it's risen since 1990, at 4 percent in the United States.

Costs for raw materials for fertilizer, not including oil, have themselves been increasing as demand for food increases. As we all feel the pinch at the pump with the price of oil rising, so do the costs of planting, harvesting, and delivering food. American families, who are already strapped by rising energy costs, are being hit again in their household budgets as food prices increase at the fastest rate since 1990.

Americans are reeling from sticker shock at the pump while government scrambles to avert a fast-moving crisis before it spins out of control. Global food price hikes are becoming a crisis. These and other conditions have been referred to a "perfect storm," by United Nations World Food Program executive director Josette Sheeran recently stated.

Energy plays its part too. Increased costs for transportation, labor and energy have driven cereal products alone up 6% in recent months. Energy costs hit us coming and going, it costs more to process food and then it costs more to move it out to the market. Energy is going to continue to get more expensive, not less. Energy costs are the largest single force driving inflation.

Supply and Demand

Some once said, "Supply and demand is not a law, it's a policy" Even though the cost of food is controlled by fundamental constraints of supply and demand, the equilibrium of good and ill also depends in part on governments. Strained supply at home and abroad is driving up food prices. Wheat is seeing its tightest supply in the United States since 1946, and soybean supplies also are on rocky ground. Summing it all up, demand is soaring, supply has dwindling, and food is being poured into the gas tank. Can we honestly believe that in the long term, thriving farms and open markets will provide a secure food supply?

In general, food prices in the stores are much less volatile than prices at the farm-level and tend to rise at a much smaller rate that the change in farm prices. Saying that overall rising food prices are responsible for the shortages doesn't make sense, considering that there would not be enough rice regardless due to climate and poor government practices in the countries like the US that are having shortages. What can we do to stay in control when food prices are rising? Here are some possibilities, eat more leftovers, cook more at home, take meals from home, stock up on good deals and make a plan to build up an emergency food storage plan.

What Can We Do to Help?

We are interested in what you would like to have us find and make available to you. Your suggestions are welcome and encouraged. Contact us with your requests and suggestions and we will do our best to find the resources for you at an affordable price.

We have just made some updates to our website. Visit us and see what's new. Some suggestions have been implemented and there are more to come. Thanks to everyone who has given us suggestions or has left us food storage tips. Keep them coming!
About the Author
Karl Bennion is the owner of Pro Food Storage a resource for planning and acquiring emergency food storage and other emergency supplies. Visit the Pro Food Storage website at http://www.profoodstorage.com for more information on emergency food storage and emergency preparedness as well as links to useful tools like an online food storage calculator.
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