Food Inflation Essay example

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Food Inflation
Why 2013 will be a year of crisis?

Paper # 3
ECON 403
References:

1. Michael. “Food Inflation, Food Shortages And Food Riots Are Coming”. thetruthwins.com. 6 Sept. 2012 < http://thetruthwins.com/archives/food-inflation-food-shortages-and-food-riots-are-coming> 2. David Frum. “Why 2013 will be a year of crisis”.cnn.com 3 Sept. 2012 < http://www.cnn.com/2012/09/03/opinion/frum-food-price-crisis/index.html> 3. Chris Mrtenson. “The U.S. Drought Is Hitting Harder Than Most Realize”. peakprosperity.com. 29 Aug. 2012 < http://www.peakprosperity.com/blog/79547/us-drought-hitting-harder-than-most-realize> 4. “BB Raises Policy Rates”. thedailystar.net. 6 Jan. 2012.< http://www.thedailystar.net/newDesign/news-details.php?nid=217128 > 5. “Chart of the Day: Food Inflation”. institutionalimperative.com. 6 Nov. 2012. < http://www.institutionalimperative.com/2012/11/06/chart-of-the-day-food-inflation/ >

Summary The article “Why 2013 will be a year of crisis?” starts with the CNN prediction about serious global crisis the population might face in 2013. CNN declares that crisis is predictable, and in fact has already begun. The author says that summer’s extreme weather (as a main reason of upcoming food inflation), has affected not only US but other countries of the world too, such as Russia, Ukraine, and Kazakhstan. The worst drought in more than 50 years has ruined the crops. As a result the corn harvest dropped to the lowest level as well as food production and prices jumped: for corn and wheat about 25%, for soybeans about 17%. The whole world faced the food scarcity problem. But if in the western world a rise in prices can be a major inconvenience, the same sudden change in prices in the developing world can mean the difference between life and death. The author gives us an example of crisis which took place in 2008 when high grain prices led to food riots in 30 different countries. He goes on to say that a drought in Russia in 2010 forced suspension of Russian grain exports that year. In addition he describes a sharp rises in the prices of consumer goods in China in 2011 which became the main economic concern for that country. In one way or another food inflation affects nations and countries of the world. The truth is that the entire globe is facing food inflation. As for the United States (the biggest food exporter in the world), the current situation seems to be too dramatic as it has never happened before in the history of country. The author summarizes the article by leaving the food inflation open-ended question as if he wants a reader to answer it: Will 2013 bring us social turmoil in Brazil, strikes in China or revolution in Pakistan?

Analysis According to experts, food inflation will affect the entire globe in 2013. No one is fully aware about the dramatic consequences the inflation may have. However, tons of articles and statistics on the web, TV, magazines, and newspapers give us an idea of what might happen. Today, a similar combination of things, combined with the weather element, is affecting world food prices again. Along with it prices of a non-food sector went up as well. In spite of the fact that food inflation always increases more than non-food inflation, the December statistics shows the following: non-food inflation crossed food inflation for the first time on a point-to-point basis and reached 11.38 percent as diesel and electricity prices went up. We can see it from the graph below.

As one can see food inflation stood at 10.40 percent. In comparison to November, food inflation fell by 2.07 percent while non-food inflation went up by 1.19 percent. Many different areas have been impacted by the dry weather. Some of the effects of the drought can be summarized as follows: “Even though the mainstream media seems to have lost some
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