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Generational Dynamics Web Log for 23-Dec-07
Wheat prices surge above $10 per bushel, sparking little concern

Web Log - December, 2007

Wheat prices surge above $10 per bushel, sparking little concern

World food stocks dwindling rapidly, according to the UN.

In an "unforeseen and unprecedented" shift, the world food supply is dwindling rapidly and food prices are soaring to historic levels, according to the UN Food and Agriculture Organization (FAO).


Price of wheat, 2005-2008, in tonnes (metric tons) <font face=Arial size=-2>(Source: UN FAO)</font>
Price of wheat, 2005-2008, in tonnes (metric tons) (Source: UN FAO)

A new level of concern was triggered earlier this week when the price of wheat surged above $10 per bushel for the first time in history, in trading on the Chicago Board of Trade (CBOT). That's twice as high as a year ago, and three times as high as the typical price of around $3.50 per bushel.

(In interpreting this graph, a "tonne" is a "metric ton," which = 1000 kg = 2205 pounds. A bushel weighs 60 pounds. So a "tonne" of wheat at $10 per bushel is: $10/bushel 60 lbs/bushel * 2205 lbs/tonne = $367/tonne.)

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Wheat prices surge above $10 per bushel, sparking little concern: World food stocks dwindling rapidly, according to the UN.... (23-Dec-07)
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During this time, other foods have also been increasing sharply in price, especially dairy, meat, egg and cereal products. Overall, the UN FAO's "food price index" has increased by an enormous 40% in 2007.

At the same time, reserves of cereals are severely depleted, with only 12 weeks of wheat in storage, and only 8 weeks of corn left. These are historic lows since the early 1980s, according to UN FAO's figures.

I've given all the reasons why this is happening several times before -- population growth, the Law of Diminishing Returns, the use of biofuels -- but there's one reason that constantly stands out in my mind as the most amazing:

What really amazes me about all this is the lack of concern.

The dwindling food stocks and the sharp increases in worldwide food prices can't be described as anything other than a catastrophe. A man who formerly had to work four hours a day to feed his family now has to work perhaps six hours a day -- leaving insufficient money for other expenses. And a man who's already working 8 hours a day to feed his family may no longer be able to feed his family adequately at all.

This is a real problem today, but instead of addressing it, officials fly in jet planes around the world to beach resorts to attend farcical meetings on climate change in air conditioned meeting halls.

The people who survived World War II would never have ignored this situation. They had just lived through years of horror, with death, homelessness and starvation all around them them, and they knew that insufficient food was one of the root causes of the war. In their determination to make sure that nothing like a world war ever happens again, they focused on producing enough food for everyone. The Green Revolution was their most spectacular success.

But as I've been writing since 2005, the price of food has been going up faster than inflation since 2000. Each time, there's always an expert who says that prices will soon start going down again, but they've only been increasing more and more rapidly.

No one cares. Anything sufficiently absurd draws more attention than this real crisis, as the world drifts toward a Clash of Civilizations world war.

By the way, have you heard? Britney's little sister is pregnant. (23-Dec-07) Permanent Link
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