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Food Prices Are About To Explode

If you don’t already know, the U.S. is currently in the throes of a massive drought that is being hailed as the worse in a quarter century.  A heat wave that hit the entire nation resulting in record temperatures above 100 degrees affected crops from corn to wheat so badly that food prices around the entire world is expected to rise considerable, thereby pushing inflation even higher.

The FAO Food Price Index, which measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar, averaged 213 points in July, up 6 percent from 201 points in June, the FAO said in its monthly update.  The rise was the first increase following three months of declines.   This increase was “driven mainly by a surge in grain and sugar prices, while meatand dairy prices were little changed”, the FAO said.

According to about.com’s Robert Longley, about 87 percent of the 2012 corn crop and 85 percent of the soybean crop stand to be ruined by the “extreme to exceptional” drought that has slammed more than half the country.  The U.S. Agriculture Department had predicted corn yields to reach be the nation’s biggest harvest ever in the spring, when farmers planted 96.4 million acres of corn — the most since 1937. But it cut its estimate a month ago and again Friday, saying it now expects the nation to produce 10.8 billion bushels, the least since 2006.  Corn is used as a benchmark for rising prices since it is used as an ingredient in everything from cosmetics to cereal, colas and candy bars.

Adding to increased pricing pressure is the USDA’s proposed purchase of as much as $170 million worth of pork, lamb, chicken and fish for national food nutrition programs, such as food banks.  This move is designed to help livestock owners who are currently struggling to feed cattle or who may consider selling off their cattle early before food prices reach maximum levels.  This early purchase might result in less inventory – the unintended consequence of which will be higher prices.

Even if you’re aware of what’s coming, what can you do to help your family.  While I don’t advocate extreme couponing, you can employ some time tested strategies for lowering your food prices including eating less meat, taking the food stamp challenge, or cutting your discretionary spending elsewhere.

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11 thoughts on “Food Prices Are About To Explode

  • Obama’s policy of using food for fuel has worked out great. This ethanol mandate was just plain dumb. Now we have both high gas prices AND high food prices. If you think things are bad in the US, wait until food inflation hits the developing markets. There are going to be entire riots and coups over food inflation.

    • We saw those riots a few years ago when the price of cooking oil shot through the roof. I’m expecting more of the same since we are also coming out of a global recession as well. The ethanol mandate certainly isn’t helping as well. Using corn, an incredibly important gain in food production, for fuel is really stupid as well.

    • It’s been awhile since I watched it, but I thought that in King Corn they noted that corn used for ethanol is not the same as that used for food. Now, it’s probably the same used for animal food, which I don’t like anyway.

  • Corns are $50 cents/ear now. I don’t think I’ve ever paid this much before. We are mostly holding steady on the food price. I think as long as you mostly cook at home, it’s always going to be much cheaper. Eating once cost the equivalent of 4-5 meals at home for us.

  • Good post! I’m definitely fearful of rising food prices. I bought into a summer coop, but my budget restricted stockpiling of staple foods. I’m restricting sugar and grains from my diet, which can be the most expensive foods anyways. I do use coupons, but I find a lot of the coupons are for bad foods. I’m thinking when I have the funds, I’ll buy large containers of dry beans. I’m thinking of going more paleo in my eating, but the feed for the animals will make the meat more expensive. It’s a battle.

  • The rising cost of food has been my worry. Drought and heat waves are experienced on this side of the globe while people on the other side are experiencing tyhoons, heavy rains, and worse, roof-level flood. In both situations, crops and food production are affected, which directly affects the price as well as our budget.

  • Great post! The rising cost of food is of definite concern. It’s good that we know it’s coming, so we can plan ahead. It’s a great time to turn vegan since the rise will mostly affect meat and dairy.

  • Before I post this comment, let me state that it reaches 100 almost daily for months at a time where I live, so I am a little biased and think that people need to calm down about having to deal with 100 degrees for a week.

    That being said, the crops can’t be babies, and I am really sad that food prices are going to rise, especially produce. I only eat “clean” food, so this will greatly affect me. Why must the food that is best for us be the most expensive?

  • I’m certainly not excited about the inflation in food prices, but I’m happy to see that it will be more manageable than first forecasted. The recent storms helped a lot in the midwest.

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