Credits: REUTERS/Rebecca Cook
This week, the speculators who bet on the future price of corn and soybeans have driven the price of those basic staples to all-time highs.
They think that the hot, dry weather loved by those on vacation this summer - that was me for the last few weeks - is going to translate into some lousy harvests later this year.
Buyers and sellers in the futures market are betting the U.S. Department of Agriculture crop estimate that's out this Friday will forecast an American corn harvest that will be the worst in nearly two decades, a result of what some are saying is the worst drought in the American Midwest in more than 50 years.
Already, some believe that rapidly rising price corn and soybean prices means your grocery store bill will be, on average, 4% higher next year.
But get this: You are already paying a whole lot more right now for some basic food staples. According to Statistics Canada, a kilogram of ground beef cost an average of about $8.20 this time last year. Now, it's over $9.20/kg, a jump of 12% in one year. A box of corn flakes is up 10%. A case of cola costs 15% more. A jar of baby food is up more than 6%.
All this while inflation for the whole economy is running at a very tame 1.5%.
But the rapid rise in the price of food is not just a Canadian problem. It's a worldwide problem. In Eastern Europe, the grain harvest is hurting because of drought there. In India, a lousy monsoon season means not enough moisture for a bountiful rice harvest.
The last time we saw rice and wheat shortages, in 2008, there were riots in about 30 countries. This time around, we'll see rice, wheat and corn shortages.
"Eggs and poultry prices will go up followed by milk, pork and beef," Scott Irwin, professor of agricultural economics at the University of Illinois at Urbana-Champaign told Reuters.
And yet, even though volatile food prices have been a global problem since 2008, the issue gets scant attention when the world's heavy hitters gather at summits like the G8 or the G20.
G20 leaders, including Prime Minister Stephen Harper, missed a perfect opportunity to do something about food prices when they met earlier this summer in Los Cabos, Mexico.
The Mexican hosts were keen to make food a top priority. Corn, of course, is an absolutely central part of traditional Mexican cuisine and there have literally been riots in the streets in some parts of Mexico because of the rising cost of that staple.
A year ago, G20 agriculture ministers put forward some good ideas about risk management and financial regulation reforms in the agricultural sector. They made recommendations that would knock down agricultural trade barriers and create opportunities for more investment.
But in Los Cabos, G20 leaders failed to take the lead from their agriculture ministers.
A lot of those G20 leaders, including those from Canada, China, Japan, Mexico and the U.S., will gather again early next month at the next stop on the global summit circuit, the annual meeting for Asia-Pacific nations at the APEC summit to be held this year in Vladivostok, Russia. If that U.S. crop estimate this Friday contains the bad news most analysts expect, APEC leaders would be wise to take some action.
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