Monday, February 18, 2008
"As food prices soar, more nations are falling back on an old--and potentially hazardous--response: price controls. ... These measures reflect the mounting pressure on developing economies as food costs rise sharply. Food-price inflation is running at an 11% annual rate in major developing countries, up from 4.5% in 2006, according to Bank of America Corp. ... Price pressures on food are mounting for two big reasons. Farmers are diverting some of their crops to make biofuels, leaving less available for the table. In addition, diets are improving rapidly in fast-growing countries like China and India. Chinese demand for soybeans, for instance, has shot up to about 47 million metric tons from 11 million metric tons in 1990. ... But many economists believe the forces driving food prices higher--including shortages of land and water in China and elsewhere--could be around for a long time. ... Chinese officials, for instance, worry that out-of-control food inflation could foment trouble in the rural hinterlands, leading to more challenges for Beijing", WSJ, 4 February 2008.
Yes, the "forces ... [which] could be around for a long time" are called people. They will be. See my 13 November 2007 post about price controls. They never work. "Food-price inflation is running at an 11% annual rate in major developing countries", interesting. What is it running at in the developed world? Commodities price behavior is looking more like that in 1973 every day.