What is Causing Higher Food Prices?
Are you paying more at the grocery store? I know I am. And the reasons for the higher prices has me concerned.
The first reason behind the rising food prices is Russia’s suspension of grain exports and Russia’s need to import more corn. Russia’s projected production of wheat is down by 10 million tons this year. Back in August the country decided to suspend grain exports so they could have enough grain to feed their own people. Just yesterday Russia extended the suspension.
Next, China announced the need to increase their imports of genetically modified corn. The numbers are not that impressive at first look. It is the fact that China has not had to increase it’s imports of corn at this scale in about 15 years that has people worried. China had to increase corn imports by 56 times the amount this year than the previous year. Comparing July of this year to July of last year the number increases to 148 times more corn imports. The potential influence of the safety of China’s grain supply could have huge impacts on the global markets.
How does this affect us in the United States? Our bread basket states are exporting more grain and corn to Russia and China. China placed an order for American corn for the first time in over 10 years. Argentina, who supplies the world with about 30% of the grain supply, sent a delegation to Russia to sell grain for the first time in 30 years. We have the supply to meet the demand for now.
But there are fears in other regions of the world which depended on Russia’s grain exports for their bread, cereal and beer. Food retailers in Switzerland and England warned consumers Thursday to prepare for higher prices on bread, cereal and beer. Egypt, which gets at least 50% of its wheat supply from Russia, is also worried. Prices of imported wheat recently jumped in Egypt by 46% in one month. Could this happen here in the United States? The answer is yes.
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