“These are tough times. The economy shed more than 80,000 jobs in two months. Prices are up at the gas pump and in the supermarket. Housing values are down. Hard-working Americans are concerned.”
It might not seem obvious, but these words from George W. Bush in a recent speech at the Economic Club of New York were meant to reassure the public and investors that the U.S. economy was fundamentally sound and would continue to grow.
But as Bush pointed out, consumer confidence is rapidly tanking. For working families, a skyrocketing grocery bill is one of the most ever-present of reminders that they have been making do with less. Each week, it seems, the price of staple food–everything from eggs to milk to cereal–edges up higher.
“I’ve spent $300 in a matter of two weeks,” one shopper, Roseann Fede, told the New York Times as she left a Bloomfield, N.J., supermarket. “It used to be like $150. Milk, eggs, nonperishable things–everything has gone up in price.”
According to U.S. government figures released earlier in March, grocery costs increased 5.1 percent over the past 12 months. The U.S. is undergoing the worst grocery inflation in close to 20 years, and the U.S. Department of Agriculture predicts prices will climb another 3 to 4 percent this year.
The problem is especially obvious when you look at the cost of individual goods. According to the Labor Department, milk prices are up 17 percent. Prices for dried beans, peas and lentils are up the same amount. Cheese is up 15 percent, rice and pasta 13 percent, and bread 12 percent. And the price of eggs has risen 25 percent since February 2007–and 62 percent in the last two years.
In all likelihood, food inflation will continue, driven by a number of factors, including the rising price of oil–hitting as high as $112 a barrel recently–which has raised the cost to deliver food and run farm and factory equipment; increases in the cost of farm commodities like milk, corn and wheat; and the declining value of the dollar, which is encouraging exports of U.S. crops and food products.
Increased government mandates for ethanol production are not only driving up the price of corn used for making it, but are pushing up prices for other staple foods–since, for example, land is being diverted from staples like wheat and soybeans to produce corn. By the end of the 2006-07 crop year, 19 percent of harvested corn was made into ethanol–a 30 percent increase in just one year. Increased demand for ethanol helped boost the price of a bushel of corn from $2 in 2005 to $3.40 in 2007.
The grim result of the increase in food prices is a record number of requests for help at food pantries around the country.
Eileen O’Shea, director of member services for the Greater Boston Food Bank, told the Boston Herald that more and more working- and middle-class families are showing up at food pantries and soup kitchens. When O’Shea recently visited the St. Francis House homeless shelter in Boston, she noticed people in suits and business attire entering the soup kitchen to eat lunch.
In January 2006, for example, the Sacred Heart Parish Outreach Food Pantry in Middleboro served 39 families a month. This past January, reported the Herald, it served 203 families.
“It’s working-class people who no longer have a job,” pantry President Bill Pye said. “Builders aren’t building, so they don’t need plumbers, they don’t need electricians, they don’t need painters, they don’t need carpenters. And when their unemployment runs out, what do they do? They come to the food pantry–reluctantly, most of them.”
According to the New York Times, for two weeks last November, the New Hampshire Food Bank was forced to distribute supplies usually reserved for emergency relief. Demand was up 40 percent from 2006, and supply was down 30 percent–an especially striking fact considering that New Hampshire is the state with the lowest reliance on food banks in the U.S.
While things may be bad for many working and poor families in the U.S., in many parts of the world, it is even darker.
According to the UN’s World Food Program (WFP), global food reserves are “at their lowest for 30 years and commodity markets extremely volatile, subject to sudden spikes and speculation. The situation has been exacerbated by the falling value of the dollar, which is the currency in which all major commodities are traded.”
Globally, wheat prices have surged 83 percent in the past year. Earlier in March, in Asia, rice prices were at a 20-year high. “When you see those kinds of increases, [people] are simply priced out of the food markets,” WFP Executive Director Josette Sheeran recently told BBC News.
The WFP reports that a staggering 854 million people in the world are food “insecure,” and 170 million children are undernourished. But UN officials say they may have to begin rationing international food aid because of spiking costs. In West Africa, alone, the WFP’s food and operations costs are now 30 percent higher than at the same time last year because of price increases for basic food commodities.
Sheeran says that the hardest hit so far are people in developing countries who live on less than $1 a day. Some 80 to 90 percent of their paltry incomes was already being spent on food.
In Haiti–where a recent Associated Press report described “containers full of food…stacking up in the nation’s ports because of government red tape, leaving tons of beans, rice and other staples to rot under a sweltering sun or be devoured by vermin”–food prices have increased so much that some of the country’s poor have begun eating cookies made of dirt as a regular source of food.
“When my mother does not cook anything, I have to eat them three times a day,” Charlene, a 16-year-old woman with an infant, said of the cookies that are made of salt, vegetable shortening and a form of edible clay that is sold by the bag.
According to the Associated Press, two cups of rice now sell for 60 cents, up 50 percent from a year ago. Beans, condensed milk, and fruit have gone up by a similar amount–and even the price of the edible clay has risen over the past year by almost $1.50.
Even middle-class people and those living in traditionally stable urban areas in countries like Indonesia, Yemen and Mexico are increasingly being priced out of the food market–or forced to sacrifice education and health care in order to feed their families.
Some governments have begun food rationing. The Indian government is having difficulty maintaining a food price subsidy system, and both the Chinese and Russian governments have moved to impose price controls in the wake of rampant inflation.
Shortages and price increases have sparked demonstrations in Burkina Faso, Mexico, Italy and elsewhere–and food riots in Namibia, Zimbabwe, Cameroon, Morocco, Yemen, Senegal, Uzebekistan and other countries.
“The risks of food riots and malnutrition will surge in the next two years as the global supply of grain comes under more pressure than at any time in 50 years, according to one of the world’s leading agricultural researchers,” the British Guardian reported.
“Recent pasta protests in Italy, tortilla rallies in Mexico and onion demonstrations in India are just the start of the social instability to come unless there is a fundamental shift to boost production of staple foods, warned Joachim von Braun, the head of the International Food Policy Research Institute.”
As Von Braun told the Guardian, “The first sign was the tortilla riot in Mexico City, where 70,000 took to the streets. I think that was only the beginning–there will be more. For a year or two, countries can stabilize with stocks. But the risk comes in the next 12 to 24 months. The countries that cannot afford to buy will be the losers, while those with huge foreign exchange reserves will bid up the world market.”