America's first official disaster areas of 2013 were designated because the 597 have experienced severe drought conditions for eight consecutive weeks, according to the U.S. Drought Monitor. Last year, 2,245 counties in 39 states were declared disasters by the USDA. With continued drought projected for much of the United States, farmers may have another hard year ahead of them. A hard year for farmers means a had year for anyone who eats. Global food prices are strongly affected by America's harvests. The critical spring planting season hangs in the balance as drought threatens to make 2013 even worse than 2012. Light winter snows haven't given much of the central U.S. the moisture the soil desperately needs. To mitigate the impact on farmers and consumers, the USDA has expanded crop insurance programs and streamlined the disaster relief process. Emergency disaster loan rates now stand at 2.25 percent. - Discovery News.
You may have noticed an increase in food prices while at the grocery store. Consumers are not the only ones taking a hit. David Weaver of the South Plains Food Bank said they are getting less bang for their buck. "Our budget is pretty much the same we're just not able to purchase as much. And so that's where we're seeing the decline. Also, we get USDA commodities through the TFAT program which purchases food and their buying power has diminished as food prices have gone up." Eddie Owens, Director of Communications and Public Relations at United Super Market said "what our guests are able to afford to provide to the Food Bank through their donations or through their cash donations are certainly impacted by the rising cost of food." Doing more with less is the only way the food bank will be able to take care of vulnerable residents in the Lubbock area. Weaver adds "we're in the process of making plans to accommodate for some of those anticipated cuts and taking care of more people." - FOX34 News.
Chinese shoppers buy vegetables at a supermarket in Hefei,
Anhui province, China. First the US and now China is warning
about sharp increases in the prices of food. © AFP/Getty Images.
China's inflation accelerated more than forecast to a seven-month high as the nation's coldest winter in 28 years pushed up vegetable prices, a pickup that may limit room for easing to support an economic recovery. The consumer price index rose 2.5 percent in December from a year earlier, the National Bureau of Statistics said today in Beijing. That compares with the 2.3 percent median estimate in a Bloomberg News survey of 42 economists and a 2 percent gain in November. The decline in the producer-price index eased to 1.9 percent. Chinese stocks headed for the biggest drop in eight weeks on concern that the quickening in inflation makes further policy loosening less likely, after data yesterday on exports and credit growth underscored the strength of the economic rebound. Chen Yulu, a central bank academic adviser, said Jan. 8 that price gains may become a concern in the second half. "With growth momentum firming up and inflation picking up, the likelihood of any further easing has disappeared and the next interest-rate move will probably be an increase," which could come as early as the fourth quarter, Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong, said in a telephone interview. - Bloomberg.
Food prices in Germany rose sharply in December, posting their strongest gains in four years. The rise added to higher costs for energy, keeping inflation in Europe's largest economy at a high level. German inflation edged up at the end of 2012, rising to 2.1 percent in December compared with 1.9 percent in November, according to latest data released by the German Statistics Office, Destatis, Tuesday. The consumer price index was boosted markedly by soaring food prices, which jumped 4.8 percent compared with the same month a year ago. "This marks the strongest increase in food prices since September 2008," Destatis said in a statement. Year-on-year, food prices rose 3.2 percent, adding to 5.2 percent higher prices for energy - the primary drivers of inflation in Germany last year. - Deutsche Welle.
Food prices around the world could soar this year if there’s a repeat
of 2012’s drought in the American Midwest. Reuters.
What is the trigger for a revolution? Sometimes it a brutal act of repression. Sometimes it a lost war, or a natural catastrophe, that exposes the failings of a regime. But more often than not, it is soaring food prices. The easiest prediction to make for 2013 is that everything we eat will once again rise sharply in price. So where will the revolutions start this year? Keep an eye on Algeria and Greece — and if you want to feel very nervous, Russia and China. And if you are smart, keep your money out of those countries as well. The link between the cost of feeding your family and political turmoil is too well-established to be ignored. We saw it most recently with the Arab Spring of 2011. The uprisings that deposed the autocracies of the Middle East had their roots in food inflation. Most of the Middle East countries import 50% or more of their food, making them acutely vulnerable to rising commodity prices. In Egypt the food inflation rate hit 19% in early 2011. For President Hosni Mubarak that was game over. The regime was finished. It goes back much further than that, however. Failed harvests in France in 1788 and 1789 meant that the cost of bread soared. From taking 50% of the average working man’s wages it went up to 88%. The result? The French Revolution. The economists Helge Berger and Mark Spoerer have pinned the European revolutions of 1848 on the soaring price of wheat. Likewise, a shortage of food and soaring prices led to strikes in Petrograd in 1917 — and sparked the Russian Revolution. So there isn’t any question that food inflation can create revolts. There are other factors at play as well, of course. The Swiss don’t take to the barricades when the price of fondue goes through the roof. It usually takes a repressive regime, a rising middle class, a lot of unemployment and an aging leader who has gotten out of touch to complete the picture. But soaring food prices are often the spark: once that is lit, the flames take hold. - Market Watch.