The FAO reported this morning on their latest global food commodity price index for January, and it rose 3.4% from Dec 2010 to Jan 2011 (which was already higher than during the 2008 food price shock).
Thursday, February 3, 2011
Food Prices Up Again in January
The FAO reported this morning on their latest global food commodity price index for January, and it rose 3.4% from Dec 2010 to Jan 2011 (which was already higher than during the 2008 food price shock).
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One striking difference between petroleum and food is that the latter doesn't appear to be priced at its marginal value. The market for food seems to operate the other way.
In the supermarket, for example, I can usually buy imported produce for less than its 100-mile alternative. My 100-mile growers typically lack economy of scale and, unlike an old oil-well,they have high ongoing input costs. They represent the margin of economic farming and owe their continued existence to added intangible values (buying local being one).
Looking at the graph, food prices were basically flat all through the 90s and into the mid 00s. It's interesting to compare the graph above with the one in yesterday's post, in which the price of some grains and edible oils appears to have risen about 50% in the last year. Eating is even more essential than driving and I still think it's under-inflated (unlike me).
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