Food Inflation

It always surprises me how people can over look the obvious.  Reporters have been saying for the few months that food is the next great investment since wheat prices are through the roof.  So now they realize that means we will be facing food inflation.

To be honest I had no idea that there had been food riots and I didn’t notice the price increase until just recently on my last monthly food shopping trip.  A 10 kg bag of unbleached white flour was $7 last month now is listed at $10.50.   That’s almost a 50% increase in price.

Well that sucks and I can hope it will be a short term thing, but I fear it will be a longer problem than people realize.  Why?  It has to do with how we grow our food.  You see our agriculture style used in most of the world is all about maximizing production, which requires then the most energy and resources to produce.  By maximizing production we end up over working the soil and drying it out.  Then toss in global warming which is shifting rainfall and causing more extreme weather as well as the high price of oil to move the food once you grow it.  I can see use see us stuck with higher prices for a while to come.

So how do you fight that?  Well perhaps it is a good time to think about a garden in your backyard or container gardening.  You won’t be able to grow enough wheat to cover your own flour usage, but if your saving a bit on your food bill you can hope to offset some of the other increased costs.    Another option would be to check out your local farmer’s market.  Since the food is produced closer to where you live you can often get a better deal since transportation isn’t such a large part of the cost. Then there is the best idea of all to reduce your bill: cut back on your meat consumption.

Well that’s a few ideas from me.  How do you plan on fighting food inflation?

18 thoughts on “Food Inflation”

  1. For staples such as wheat and milk I don’t think there is any real way that the average consumer can fight food inflation but for most items substitution would work just fine…if beef goes up buy pork, if apples sky rocket buy pears etc…


  2. There is no proven link between global warming and severe weather events.

    Warmer weather will generally be better for those of us in Canada since our growing season will be longer.

    Food crop yields get far higher as you increase the CO2 in the atmosphere, as far as I recall peaking somewhere near 1000ppb which is far higher than it is now.

    Also, Global Warming has been on vacation since 2000 . . . we’ve pretty much hit a plateau for near a decade. You just don’t see it all over the news because it doesn’t support political agenda.

  3. Realistically, I’m making a conscious effort to reduce portion sizes – as I tend to just eat what I put on the plate – this will also help with my “personal” inflation.

    Half-jokingly, a loose hedge would be investments in agribusinesses. And of course you can invest in commodity futures for more of a hedge.

  4. Its a bad situation indeed but your totally mistaken about the causes. Perhaps you should look towards US Ethanol subsidies who are pushing farmers to stop producing food to switch to Ethanol.

    Reduce the offer and the prices will rise. Its economics 101.

  5. Ishmael by Daniel Quinn is a good read about our “agricultural revolution”. It’s a challenge many people face in the first world that simply doesn’t exist in certain third world societies (those not affected by drought or famine).

  6. MCM,

    Good point. There is some ability to shift around non-staple items.


    Excellent point. US ethanol production is a huge factor as well. I should have mentioned that. Thanks.


    I didn’t say say severe, but extreme. I refering to the fact you tend to see a movement away from typically norms which generate larger shifts in local climates than people are use to. Some may be severe, but it’s the general pattern shift that is more significant (ie: rather than one week of year of really hot weather you get three).

    Actually I’m not so concerned with the temperature shift, but rather mositure patterns. Most of the southern SK is just over the amount of rain a desert climate gets. If that drops over the next few decades we could see a shift to very dry conditions with higher rates of crop failure.

    Good point on higher CO2 levels and longer growing season.


  7. Well, I haven’t done too much reading on moisture patters, but the general consensus is that higher temperature will allow more moisture in the air and then in turn make more precipitation. I think we’ve witnessed this first hand across the country this year with a not-so-cold-oh-so-snowy winter. At least that’s how it looks in my back yard.

    Also, with the upcoming solar cycle 24 ramping up for 2009 and peaking around 2012-2014 or something we should see greater yields once again due to the increased solar output. I’ve been thinking just with these facts alone that Canadian Agriculture may make some great investments from now for the next 5-6 years or so.

    Now, if only I could get money together to start investing. I could put these theories to the test.

  8. …similarly to your farm’s market idea but what about going to pick your own farms?

    We have two problems- as someone alluded to, we are growing for the wrong reason now and the cost of fuel has increased prices. I’ve gone over my food budget in the last two months not because of over-spending but plain old price increase.

  9. I am of two minds about this. IFPRI thinks the food price issue is a long-term problem. Per Pinstrup-Andersen thinks it’ll level out and then drop again in a couple of years. In any case, most of us in HICs don’t *really* need to worry about it. We’ll just have to spend less on frivolities.

  10. I’m not sure I agree with the U-Pick model of farming due to the fact that transportation costs of the food is insane; both to individuals and the environment. I think farmers markets and CSA’s have a much more sustainable and intelligent model.

    Take for example a farmers market in a town. The farmers get a large truck, bring the goods in to the market. The ‘city folk’ all go to the market, but up the fresh goods and go home.

    In a U-Pick scenario, all those ‘City Folk’ have to travel out to the farm to get their goods, so instead of one truck that gets 5MPG going 50 miles you have 150 cars getting 30MPG going 50 miles. This makes it 10 gallons of fuel to use the truck, or 240 gallons for the cars.

    CSA’s seem to work, and there is even one in my area that I’m contemplating. I’m just not so sure I want all the goods and the risk involved if something goes wrong. So I think I’ll stick with farmers markets, and just the good ol’ grocery store.

  11. I’m totally with MCM and yourself on substitutions. Food is still very affordable if you minimize the amount of processing you pay for. For example, I can buy my body weight in potatoes for $22.50 and flour for $70.

    I was at a conference a while back where the head of a grocery store association gave a keynote talk… one of the things he said that stuck with me was (paraphrase) “we don’t sell food, we sell time”… my approach to minimizing food cost is to buy groceries with as little processing as possible and I find it keeps the cost quite low. Replacing meat with other proteins also presents a big savings. IMHO Baking and cooking is enjoyable and once you find the right recipies doesn’t need to take much time.

  12. Food inflation will be here for a while. There’s going to be no quick fix, because the same factors that drove up energy and metal prices are moving up food as well: the emerging markets of Asia.

    Ethanol is part of the story. Corn ethanol is one of the stupidest things. If you did a simple google about the efficiency of corn ethanol, you’d see that the energy used up to produce the ethanol is often more than the energy produced (energy from ethanol). Also consider that ethanol only contains about 75% as much energy as gasoline. so litre for litre, ethanol will only get you 75% the distance of gasoline. and yet it cost the same. go figure.

    Going back to the demand side, we see that as incomes in the emerging markets improve so have their lifestyles and income. Energy has gone up because they are buying cars, running lights, refrigerators, etc. Metals because they are consuming them through durable goods as well as infrastructure. Food because they want to eat like Westerners. No more plain rice and three times a day…they want steaks! As grains go up, so do the products taht are produced by the grains. Pretty much everything. Meat is mainly grain fed in many cases, so expect meats to go up. And as one grain goes up, more farmers will move their crops to that grain. So, the otehr grains will go up because there is less supply of the others.

    I could go on, but the point is that food inflation is here to stay for the next several years. Unless of course, there is a pandemic that wipes out a good portion of the population.

  13. Substitution is definitely a good defensive move. My husband is from a Bangladeshi family, and in that culture they eat a ton of rice. We almost had nervous breakdowns in the local bodega recently when we saw how much the cost of basmati has gone up. We can switch it out of our diet painlessly, but people were really rattled that their staple food has increased so much.

    We like to garden but the squirrels and raccoons like our plants too 🙁 Last year all they left us was the chilis and coriander. They don’t like spices, I guess.

  14. Good comments. I fight food inflation with a hedge. Invest in the companies that stand to gain in this environment. My personal favorite is a fertilizer junior Potash One symbol KCL but for the more faint of heart check out Agrium or Potash Corp. Farmers worldwide will be looking to maximize yields and bring marginal land into production using more fertilizer for years to come.

  15. glass & scrap lumber can protect your plants from wild nibblers.
    I’m growing an herb garden in my kitchen, and I eat lots of spuds. One got lots of eyes, and I put a chunk of it into dirt and it’s poking up…becoming a potato plant. Hope to have a bell pepper plant, onions, maybe some carrots growing soon!

  16. Potatoes have more protein than rice or wheat and are easy to grow in small spaces.

    We are going to sow winter wheat in our backyard. One just sows it into the lawn in Fall, it comes up, the kernels can be harvested in Spring, and keep well at room temperature. Since it’s a hybrid, one can have a normal lawn at end Spring (when your dormant regular grass comes up). Two cups of winter wheat kernels can be soaked in a baggie to “sprout the wheat”, then ground, and you can bake your own delicious, high protein bread.

    We will raise yellow carp in the back yard in vats, and in fall dry them for “fish jerky”. This keeps six months at room temperature.

    We have a variety of berry vines, two apple trees and a plum tree and a large raised bed vegetable garden.

    I anticipate meeting all my family of four’s basic food needs with my one eighth acre suburban back yard, and expending no more than 6 hours a weekend doing so.

    With the improvements in technology, and the access to high quality seed, water, soil, compost, and weather patterns, there is no reason that the average North American can’t raise as much food for the table in their back yards as the pioneers did in their homesteads.

  17. The problem with wildlife can be solved by netting your garden. A couple of pvc pipes with netting spread over them will protect produce from birds, and racoons etc. (We have a couple of dogs too, which help). We also plant aromatic plants near by. The racoons don’t like the smell.

  18. The netting is also helpful, in that if there is going to be a cold snap, one can put plastic sheeting over the netting to “greenhouse” the plants. This can be done in a semi permanent fashion to extend the growing season into fall.

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