Tag Archives: Price Rise

Food Prices on the Rise



So food prices are on the rise …again! And it looks like they might continue on that path given the pessimistic outlook for wheat in the US given the dry growing conditions. In addition, the situation in Ukraine spells uncertainly for the world wheat market. As I read more about this I also discovered the interesting fact that farmers in Ukraine have apparently breached a ban on GMOs and are growing GM soy and corn in response to market demand!

How Math Predicts Revolutions Based on Food Prices


The point about rising food prices being a factor in social unrest has been explored before but now there is a model that can predict when and where revolutions will occur based on food prices. According to this, when the FAO food price index reaches 210, social unrest is triggered. Among the list of countries are some where this has happened on a large scale(Venezuela is a current example), some where it is still contained (India) and also some surprises (Sweden?!). The author of the study, Prof. Yaneer Bar-Yam of the New England Complex Systems Institute , points to two major causes for rising food prices: the rise of biofuels and speculation in commodities. And what happens to these two variables will determine if prices will be lower this year. Ethanol mandates are being debated in the US and EU, but speculation is another matter. It is spoken of much less than labeling, or any other food issue of the day.

Consider, also, the impact of climate change. (This was an important factor in the case of Syria, for instance.) Unpredictable weather events, a sudden drought or flood may result in a below average harvest; but higher prices in the global market (fueled by speculation) provide an incentive for exporting most of the crop. This would mean less is available for domestic consumption and  prices would rise for whatever is on the market. If prices were to rise to critical levels, as predicted by this model, social unrest would follow. 

What are the chances of regulating commodity speculation, proposing , for example, some limits for trading? It is difficult, perhaps, to be optimistic on this issue but it has to be highlighted in any conversation on the food system.  Food is a commodity, yes, but it is not like any other commodity. If trading in future, hypothetical, stocks of grain  means people are starving in the present then that is not an acceptable situation and efforts to correct it should not be blocked by purely financial interests.

(Image Courtesy: freedigitalphotos.net)

Non-GMO Cheerios: Something to Cheer About?


The news that General Mills is going to eliminate genetically modified elements from their line of Original Cheerios was greeted with cheers by many. If true, it would represent a big change in the way the cereal is produced. But how big is this change, I wondered.  Reading closely we find that the main ingredient, oats, were not GM anyway, it is the corn starch and sugar that are being sourced differently and this will only happen for the Original line not for others like Honey Nut, Fruity Cheerios , Apple Cinnamon etc. It is, then, only a small tweak in only one cereal, right. Wait, there is more: on her blog, the Farmer’s Daughter  USA quotes Margaret Smith, Professor of Plant Breeding at Cornell University.

“In reality, Cheerios isn’t changing at all. Margaret Smith, professor of plant breeding at Cornell says:

Corn starch and sugar are highly refined products, so they contain no DNA (which is what is introduced into a genetically engineered organism) and no protein (which is what the new DNA would produce in a genetically engineered organism). Because of that, corn starch and sugar from a genetically engineered corn variety are nutritionally and chemically identical to corn starch or sugar from a non-genetically engineered variety.

It is the exact same cereal.”

The statement from the company seems to indicate that the corn and sugar General Mills uses in future will be conventional, non-GMO (there is no mention of use of organic crops). The main reason for using GM corn is to prevent crop loss to pests,  not world domination ,as so much of anti-GMO propaganda insists. So, how are the pests going to be dealt with? Would this mean increased pesticide use to prevent crop losses? Everyone agrees this is not such a good thing: for the farmers who have to handle and apply the stuff, for the consumers or for the planet. The use of non-GMO crops involves a real cost in terms of crop loss which in turn would impact prices of these crops and the quantities produced, more here.  For example, if in a given year,  x hectares of corn was planted with the expectation of a yield of  y tonnes, and the yield is lower due to crop loss to pests; global demand for corn stays ahead of global supply, next year the farmers might respond by growing x+some hectares by cutting down forests. That is not a great outcome. Would it be better to switch to organic corn and sugar? There are doubts about organic cultivation bringing in the required yields . Besides, organic farming also uses pesticides, just different ones from those in conventional farms.

So far, none of this is positive. And the question remains, why this decision now? What does the producer get out of this?  Well, the company can, for example, put on a big label on its package saying “No GMOs Used” (or something to that effect). This highlights exactly my misgivings with the labeling issue. Basically  a label can obscure as much as it reveals. Consumers, overwhelmed with all the fear mongering on the GMO issue might be persuaded to buy more of what they think is “safer” for their families. This means more sales and more profits, good news for the company.While General Mills has a big chunk of the market, its share has slipped in 2013 (by a tiny bit) and this would be a good time to bump up the numbers.

Just as the insistence on a tortuous and long drawn out approval process for GMO crops tips the balance in favor of big corporations; the clamor for labeling can also have unintended consequences. It will make a difference , yes, but to the big  producers and not to the consumer. Not much to cheer about, after all.

What We Expect From Fast Food


A recent road trip brought up for me the fraught issue of the cost of food. Traveling with kids (who for some reason seem to be ravenous  on the road although they have to be coaxed to finish up at home!) means that at least some of the meals have to come from fast food outlets as the process isquicker, cheaper and gives rise to less controversy and negotiation. Still, when you get home and do the bills, the amount spent on food is a big part of the trip expenses.

So I was intrigued to read Mark Bittman’s take on the possibility of healthy and edible fast food and was mostly in agreement but for two points. The first is cost:   if we define a fast food meal (as the article does) at about $10 for a wrap/taco/sandwich and shake, that works out to an average of $40 per family for just one meal of the day (and ravenous kids eat frequently!). I fully support paying  fair wages to farm workers and a fair price for food grown with good farm practices but do look for good prices which won’t bust the budget. How do we reconcile these two variables?

The second issue is that of our expectations from fast food . What proportion of our meals do we actually eat at such places? If it is an occasional meal, on a journey or for a treat (“I cleaned my room, can we get donuts?”), or the house is getting a makeover and we can’t cook tonight, my expectations would be moderate. Yes, it should not be greasy and disgusting and tasteless but fresh-from-the-fields-the-way-Mom-made-it is not really essential.

Let us not delude ourselves: it is possible to maintain the highest quality levels only in our own kitchens when we source and handle the ingredients ourselves. So if the food meets basic health standards, the workers have been fairly treated and it comes out fast, the pricing should position it where it is an option available to all. Demanding the highest quality ingredients and standard of cooking will push prices too high and make it unaffordable and inconvenient. After all, when we opt for fast food, it is the “fast” rather than the “food” which is the key factor in our decision-making process.

The Real Price of Food


Looking back on grocery budgets for a few years , you might notice that almost all the items cost more today. Sure, prices rise with time and the weird weather impacting harvests everywhere also has a role to play, but there is another underlying factor which is at work here.  While commodities like corn or soy have historically been traded on exchanges, today the market is being changed by the entry of financial institutions and people that have no connection with the actual growing or selling of food. This type of trader deals in derivatives which are not positions on actual crops grown but some financial version of them. This means that the price of wheat, for example will not be influenced by the actual yield but speculation based on artificially created numbers. This creates much more volatility in the price of food grains than would normally be the case. The food system is already going to face the pressure of climate change, now we need to add to that an artificial and unnecessary pressure created by trading in commodity derivatives. It is precisely this type of speculation that fueled the disastrous housing bubble. That it should be permitted to function in the domain of food when nations and people are all struggling with food security is troubling.  The chances of such speculation being stopped entirely are slim but some effort for regulation and oversight is crucial. For more reading:


Click to access presspb2012d1_en.pdf

And just as I was getting ready to post , news on futures trading in turmeric! It seems that in a time of continuing global economic crisis, speculators have decided to put their bets on food and that is an ominous development.

Wal Mart is Coming to India

veg market

Recently the Indian government announced that foreign investment would be allowed in the retail sector, and, after some debate, the relevant legislation was passed by the Parliament and is now the law of the land. This means that  stores like Wal Mart , IKEA and other supermarket chains will start operations in India. What does this mean for Indians particularly with regard to food? There is reason to believe that farmers would benefit as stores now start competing for their produce;  productivity gains are expected as less food is wasted due to improved refrigeration and storage and the consumer is also expected to have a more enjoyable shopping experience at, hopefully, affordable prices.

It is uncertain what the new policy will mean in terms of jobs. The jobs generated by the supermarkets would require a different skill set from those possessed by the small holder farmers and small traders who would be most vulnerable to the coming changes. And what about the little corner stores and produce stands that currently dot the landscape? Certainly, some small stores will go out of business, that is inevitable. However, in matters relating to food, emotions  are just as important as data. Many people enjoy chatting with their neighborhood store owner as they get their shopping done. They also enjoy little conveniences, like free home delivery even with small orders or some credit at the end of the month when finances are tight. For every middle class consumer who is looking forward to shopping at the supermarket, there is one whose income would not stretch that far. And going by the popularity of farmer’s markets in the US, for example, the small farmer will still have the option of setting up his wicker basket of vegetables  on the sidewalk.  And even the supermarkets might have to think about adapting to local customs: China’s indigenous grocery chain RT-Mart wins out in part because it lets customers come in and choose their fish live (it is then processed for purchase) as they have been used to doing at their neighborhood stores for centuries!

So, the outcome of this new policy is far from clear.We will be following how this change works out.

Why the Debate on Organic Food is Redundant

The debate on the organic food issue has recently intensified with a number of studies coming out, like the Stanford study which reported that there was not much gain in nutrition from eating organic foods, or the one from Oxford University on the environmental impact of growing produce with organic methods. With each new announcement the discussion gets shriller and, to the layperson, quite bewildering, so here is an attempt to sort out some of the issues involved.

Health Impact: Nutritionally, it is pointed out that there is not much difference between conventional and organic food. Proponents of organic food argue that the heavy use of pesticides in conventional farms is dangerous for health. While conventional farmers are required by law to maintain pesticide use within levels deemed acceptable for human consumption, organic farmers too use pesticides and anything that is used to kill pests cannot be totally benign. The organic pesticide rotenone has been associated with certain health risks as well. Consider the case, then, of crops that have been genetically modified to resist pests thereby lowering pesticide use by huge quantities. I understand that “genetic modification” often makes us imagine something from a sci-fi film gone bad. But over the millennia, farmers have tried to cross breed plants to get a hardier or tastier variety and doing so at the genetic level is actually more precise. After all, the non-invasive procedures used in major surgery today are preferred by patients to the past techniques of making a big incision for every procedure. And while there is consensus on the need to reduce antibiotic use in the meat and poultry industry, the organic standards actually require that sick animals not be treated with antibiotics which is of some concern.

One point that gets lost in the cacophony is the potential for biofortification that we can use to combat malnutrition and improve other health outcomes. Rice that is fortified with Vitamin A would help people who suffer from this deficiency (and this is widespread in many areas of the world). We all know about the benefits of eating bananas? So should we try out some techniques to protect it from being wiped out by blight and disease? We can try, with conventional breeding programs as well as with genetic modification.

Environmental Impact: Organic food has been presented as good for us and, also, good for the planet. While it is true that organic farming practices do benefit the area they are grown in, they have a larger carbon footprint than conventional methods. Since more land is required to grow organic crops than the same quantity of conventional crops, more forest cover and open land has to be cleared for farming instead.

If one were to stick to an all-organic diet throughout the year, it would mean that organic lettuce in December, for example, would have to be shipped from overseas to the northern parts of the world, and the environmental impact of this would be huge. Eating conventional crops grown locally and in season is the greener option.

Organic farms do protect biodiversity but GM crops are not the devastating force they are often made out to be. In fact, a study has shown that they can actually promote the growth of secondary pests (which would have been the prey of primary pests) and add to biodiversity.

The biggest crisis looming over us today is the one posed by climate change. Even for those who do not believe in that term, the weird weather and crippling drought this past summer must be of concern. As the weather becomes unstable, our ability to produce food to feed the entire population of the planet is going to be affected. The effort to mitigate this by developing crops that are drought and flood resistant can be pursued by organic methods and biotechnology and it is critical that both are employed or food scarcity and rising prices will be a reality in the coming years. Also, conventional farming is able to achieve higher yields for grains, which are a part of staple diets worldwide, and opting for organic would further exacerbate grain shortages.

Economic Issues: The first thing that strikes anyone comparing the prices of conventional and organic produce at the grocery store is the big jump in prices of organic produce. Working on a median income budget, one is forced to pick a few items that we can buy from the organic section while settling for the conventional option for others. For a family, organic milk may be bought for the children alone because buying it for the whole family makes a gaping hole in the weekly food budget. A study found that buying an all-organic diet involves paying a 49% premium and the food share of the budget rises from 11 to 18%. These are not trivial numbers and younger families on starting incomes with small children and potential mothers might be greatly impacted by this. If this cost differential means that we forego buying or eating fruits and vegetables because they are not labeled organic, this involves a serious nutritional cost in terms of health outcomes for children in their growing years and also in maternal nutritional standards.

I am surprised when people say they will not buy conventional or GM foods because of their opposition to “Big Ag”. If the concentration of market power is a concern, there are other, legal, ways of dealing with it than throwing out options that would enable us to feed more people. By opting for a method of cultivation that has lower yields we are impacting our ability to feed all the people on the planet. The cost of yield forgone is also a cost, even though we do not see it listed on our check out receipt. And if is big corporations that one objects to, perhaps it is important to know which companies actually own the organic brands we see on the shelves: Kashi is owned by Kellogg, Horizon by Dean Foods (the J.M. Smucker Company), Honest Tea by Coca Cola, Naked Juice by Pepsi, Cascadian farms by general Mills, the list goes on.

And then are those who say that the only solution is to grow your own food. If you were to grow everything needed to feed a family of four, including grains and raising livestock, then that is pretty much all you could do. Farming is hard work and we need to respect those who grow our food. It is not about tending a community garden or backyard alone because that will not meet all the needs of a family. It is also less efficient on a social level. Conceptually, if everyone does what they are best at, we have the best food from farmers who know their work, good instruction from teachers who are trained for that, can build the best rocket designed by people who are skilled in that area and so on. If instead, everyone spent their time growing their food, we would have to live at a subsistence level.

We need a food system that is efficient, green and fair to its workers. To achieve this in the context of a population heading towards 9 billion and changing climatic conditions we need to exercise all options: use good farm practices like crop rotation, reduced tillage, planting perennials with seasonal crops, reducing pesticide and antibiotic use and also exploring the potential of new technology wherever it is possible. Organizations like the WHO and the National Academy of Sciences endorse the view that GM foods are safe for consumption. In Europe, where labeling already exists and which has seen some of the strongest opposition to GM, a recent report based on a decade long research effort also concluded that there is no negative health impact from GM foods.

Too often, we get overwhelmed by competing messages in the media, by the variety of policy challenges that political leaders seem ready to ignore and retreat from the discussion. This is not the time to do so, both for our families and for our planet. Partisan battles on this or that technique are a waste of crucial time; we need to make use of all the tools and knowledge we have to the benefit of our families and our planet.

How Climate Change Caused the Quinoa War

The last time I wrote about quinoa, I had yet to try it. All around me though, there was a buzz around this wonder food. Even then, it was unsettling to know that while there was a huge demand for quinoa abroad, back in Bolivia, the high prices for this crop was forcing consumers to move over to other options including novelties (to them) like soda and white bread. Now, there is a new twist to this story: climate change has lead to warmer temperatures in quinoa growing areas so now more land can be used for this purpose. This has sparked conflicts among farming communities eager to grow more quinoa and take advantage of the high prices they can get.

I did eventually bring home and cook quinoa and we all enjoyed it. But it also brought into focus the troubled future of food where there is increasing pressure on the food system to feed the growing population while climate change forces us to change the way we grow food.

Change Comes to Retail Food Industry in India

Most Indians have always bought their fruits and vegetables at the stall at the corner of the road, or the nice store that would deliver even a bunch of cilantro or a bunch of carrots to your home if you were in a fix. The supply chain that brought this produce to the market was haphazard at best. Now, all that is set to change, with the Indian government deciding to allow foreign investment in the retail sector, upto 51% for multi-brand retailers like Walmart and Carrefour. There will be various conditions that they will have to satisfy, such as a minimum amount invested in 5 years, support for rural infrastructure and jobs etc. How all these plans work out remains to be seen but the retail scene for food will change drastically. The new policy is expected to dampen inflation, bring in more efficiency and productivity and reduce wastage. Matthew Yglesias pointed out that it will probably result in the top 1% getting extremely rich but so along as the families around the median and the extremely vulnerable are not squeezed, the policy should be a positive one. I am not so sure ,mostly for the food sector. All the people involved in growing, transporting and bringing this food to the family table ( and they number in the millions)will be affected as this policy is put in place. In time, they may benefit but the initial impact will be hard. At a time when there is mounting hunger , malnutrition and concerns about the impact of climate change on agricultural productivity ( specially in South Asia), this new policy will add another variable to an already volatile situation. Caution and a long term perspective should be the way to go in this regard.

The Real Farm Subsidy Story

The Environmental Working Group has just published its report on farm subsidies in the US based on data from the year 2009. Before getting to the analysis itself, it is important to note that the report is based on 2009 numbers because the USDA demonstrates a troubling lack of transparency when it comes to giving out information. What emerges is a clear picture of a subsidy program gone astray. First off, the recipients of these payments are not required to even work on or won a farm. Indeed, the biggest beneficiaries of a program intended to help farmers are actually big agribusinesses, particularly in the south. How uneven is the distribution of this pie? The top 10% of the beneficiaries of this program received 55% of the total payments. Even this cursory reading will reinforce what we know already: small farms which are more vulnerable to the vagaries of prices and weather are not befitting from direct payments at all. This program is merely handing out cash to big players in crops like corn, wheat and soy. Remember that fruits and vegetables are not even covered by this program. So if we are looking to overhaul the food system, eliminate junk and encourage healthy eating, subsidy reform seems like a really good place to start. The EWG data presentation is detailed, fascinating and even available by state here.