In the United States, when world wheat prices rise by 75 percent, as they have over the last year, it means the difference between a $2 loaf of bread and a loaf costing maybe $2.10. If, however, you live in New Delhi, those skyrocketing costs really matter: A doubling in the world price of wheat actually means that the wheat you carry home from the market to hand-grind into flour for chapatis costs twice as much. And the same is true with rice. If the world price of rice doubles, so does the price of rice in your neighborhood market in Jakarta. And so does the cost of the bowl of boiled rice on an Indonesian family's dinner table.
Welcome to the new food economics of 2011: Prices are climbing, but the impact is not at all being felt equally. For Americans, who spend less than one-tenth of their income in the supermarket, the soaring food prices we've seen so far this year are an annoyance, not a calamity. But for the planet's poorest 2 billion people, who spend 50 to 70 percent of their income on food, these soaring prices may mean going from two meals a day to one. Those who are barely hanging on to the lower rungs of the global economic ladder risk losing their grip entirely. This can contribute -- and it has -- to revolutions and upheaval.
I suspect that food prices are more than an annoyance to the indefinitely unemployed, but from my vantage point, the food crises and revolutions have been in the less developed world, while persistent high unemployment has led to less violent upheavals, like Occupy, in the more developed world. Could it get worse—everywhere? This November, just ahead of the Durban talks, Brown spoke to Voice of America about growing crops in a changing climate. Extreme Weather Intensifies International Food Crises, was part two of his five part article on climate change, food, water, disease and pessimism.
One of the world’s eminent environmental scientists says modern agriculture has evolved over an 11,000 year period of “rather remarkable” climate stability. “Agriculture as we know it today is designed to maximize production with that climate system,” said Lester Brown, a former farmer and founder of the Earth Policy Institute in Washington, DC.
Brown, a recipient of the United Nations Environment Prize, added, “But that climate system is no more. The earth’s climate system is now changing. And with each passing year, the climate system and the agricultural system are more and more out of sync with each other…making it more difficult for farmers to expand production fast enough to keep up with (world) demand (for food).”
My wife and I shop together, and have been noticing higher prices and changes in the packaging for over a year. We go in to buy a few things and spend $50 to $100, just as observed in Food prices rise, portion sizes shrink:
If you feel as if your usual grocery budget doesn't go as far these days, it's not your imagination.
Food prices are rising, and packaged food sizes are shrinking.
Prices for food and beverages consumed at home have been creeping up steadily since about May of last year, according to the Bureau of Labor Statistics' Consumer Price Index.
As of October -- the most recent data available -- the index was up 6.2 percent over October of last year.
To control costs we've switched to store brands and cut back on meats. To maintain quality my wife makes our bread, juice and ice cream. One blow was when the couple that ran our farmer's market retired. Beverages are so riddled with sugar, corn syrup and additives that I've given up drinking just about anything but "sun tea." But it won't be getting better:
U.S. Department of Agriculture research economist Ricky Volpe says the culprit is a triple whammy: commodity prices across the board are high so food manufacturers are passing along the cost of acquiring raw materials; the weak dollar has increased demand for domestically produced food abroad; and fuel prices have driven up the cost of manufacturing and distributing food.
Get used to it, Volpe said.
"We don't see food prices turning around for a while," he said.
"Consumers should see prices continue to rise next year, but not as quickly as they have been."
Prices are expected to be up 4 percent to 5 percent this year, and maybe 3 percent to 4 percent next year, Volpe said.
Meanwhile, food producers have been reducing package sizes to hold down costs.
Most single servings of yogurt have gone from 8 ounces to 6 ounces, for instance. Cereal boxes, on average, are about 2.4 ounces smaller than before.
"Those smaller package sizes are becoming more and more the norm," said Dave Heylen, spokesman for the California Grocers Association. "Across the board, you see it in almost all areas of the grocery store."
Retailers have tried to buffer consumers from price increases, but they don't have much room to maneuver because supermarket profit margins typically are less than 3 percent, Heylen said.
I'm designing a restaurant, but the trade publication, Packaging Digest, notes that Food trends point to rising prices, more home meals is oriented towards the sellers, and predicts an interesting year ahead, which reminds me of that famous curse—May you live in interesting times:
A continued desire to save money will lead more Americans to eat at home in the coming year, and consumers will rely even more on technology to shop for bargains and make community connections, predicted Supermarket Guru Phil Lempert.
Lempert, who works closely with ConAgra Foods and its retailers, has analyzed the food industry landscape and sees an interesting year ahead for food trends.
"2011 brought us higher food prices at unprecedented levels, in part because of crops and livestock being destroyed by global weather catastrophes," said Lempert. "We will continue to see higher prices, but we will also see all the different ways Americans love their food - in supermarkets, on television, at restaurants and now even on their mobile phones. We are on the verge of what may be one of the most exciting and game-changing years in the food world."
Food Prices Keep Rising: Continuing a trend from 2011, environmental conditions and higher production costs will bring rising food prices in the coming year. [Aargh]
Baby Boomers Keep Right on Truckin': The 76 million people who started turning 65 last year will become food influencers and purchasers, controlling 52 percent of the total $706 billion spent on groceries by 2015.
Increased Emphasis on "Farm to Fork" Journey: Shoppers are increasingly interested in knowing where their food comes from, which is why 2012 will bring an added emphasis to a different kind of food celebrity: the farmer. [Another article claims that food safety is actually the biggest food story of 2011 in the US]
The End of the Checkout Lane: Many shoppers are learning to appreciate the tech-savvy nature of self-checkouts, comparing prices at nearby retailers, cellphone scanners, in-store interactive media devices, QR codes, RFID and mobile coupons. [We know all the checkout ladies at our little Weis Market. And the mentally-challenged fellows they hire to bag groceries. They're probably doomed, but we avoid the self-checkout lanes to keep them busy.]
Ethnic Food Revolution: Food trucks are replacing gourmet and specialty stores as the channel to experiment and discover new food experiences - especially when it comes to ethnic foods. [Not for us]
New Role of the Male Shopper: The Bureau of Labor Statistics found that 41 percent of men are now doing the food preparation, as compared to half that amount in 2003. Look for them to do more of the grocery shopping. [If only to carry the bags of money they'll need.]
Eating at Home = Extreme Home Cooking: Get ready for yet another slowdown at foodservice establishments as more men and women eat at home to save money. [Already there.]
How Sweet It Isn't: Look for reduced sugar products to be the biggest health claim in the coming year, along with a revised nutrition facts panel on food. [Already there, too.]
Listen for the Sound of Food: People judge the readiness of some foods (like microwave popcorn or grilled burgers), by the sounds the foods make. Multisensory perception will be one of the new "food sciences" in 2012, as psychologists and food scientists join forces to design, create and influence the sounds of our foods to convey freshness, taste and even health attributes.
Supposedly, Durban has given us the outlines of a climate agreement. Can you hear the sizzle?