Are food prices rise permament?

[PainRack]

Is the current inflation in food prices temporary, due to a temporary mismatch between supply and demand, to be corrected when farmers produce more food the next season?


Or is this simply the market correcting itself to show the mismatch between market conditions and prices? After all, food prices have been holding steady or dropping for the last few decades, but agriculture operational costs have been rising. Fertilisers prices have been increasing, transport has been increasing, wages have been increasing......... To make things worse, land prices have also been increasing, to the extent that its difficult for small farms to expand their operations.

Similarly, the increase in land prices has meant that farming land are more valuable as either residential areas or industrial areas. Valuable agriculture land have been lost as farms are converted to housing or factories in China, and this would no doubt be replicated throughout the world as land prices rise, and the low profits of agriculture mean that agribusiness/farmers would find it difficult to justify purchasing overpriced land(for farming, not for other purposes).

Lastly, hasn't environmentalists been warning about the cost of effectively "mining" agriculture land? Our farms are now running at such excessive capacity that production could not be sustained at anything remotely "natural" means, requiring excessive fertilisers, water irrigation and other means of support. This would place them at the mercy of other commodity shortages, such as water or rises in chemical fertilisers and oil.

So..... what do you think?

[Mayabird]

There'll be ups and downs in the short term; it won't be a steady maintenance of high prices, but averaged out over the next decades, pretty much yes.

[K. A. Pital]

After all, food prices have been holding steady or dropping for the last few decades

I don't know where you live. Here, the price only got upwards for the last 20 years.

Most likely there'd be short term up/down trends, but over several years, the vector would be up.

[PainRack]

I don't know where you live. Here, the price only got upwards for the last 20 years.

Most likely there'd be short term up/down trends, but over several years, the vector would be up.

I'm sorry, I should had made myself clear. I didn't mean retail prices, but rather, the prices at which suppliers purchase crops or milk from farmers. After all, goods such as coffee, sugar has been depressed until a couple of years ago.

[K. A. Pital]

After all, goods such as coffee, sugar has been depressed until a couple of years ago

These prices indeed oscillate, but I think you should really be asking about important items such as dairy/meats/grain products as opposed to stuff like coffee and sugar.

Some types of foods did not suffer inflation either, I didn't notice inflating coffee prices as far as I can see here.

[Enigma]

Even if the supplier could purchase crops\milk\meat\whatever at a low price from the savings doesn't necessarily translate low prices for the consumer.

For example, the result of a couple of cows died from Mad Cow, the U.S. had all but shut the door to Canadian beef. The price per hundred pound of cattle (cow) here in Ontario went from roughly $50 to $8.84. So a thousand pound cow went from auction for about $500 down to $88.40. A big slap in the face for the cattle farmers. The prices only managed to return to pre-MC prices within the last couple of years.

But during that time, did you think that the savings were passed on to the consumers? Nope. Retail prices didn't change one bit. Farmers got the raw end of the deal while slaughterhouses\meat packers reaped in record profits.

Nevertheless, as mentioned before prices for food in fact anything will always go up. It is only a matter of how much.

[Enigma]

EDIT: the prices listed may not be entirely accurate. Been having trouble figuring out the prices.

[PainRack]

After all, goods such as coffee, sugar has been depressed until a couple of years ago

These prices indeed oscillate, but I think you should really be asking about important items such as dairy/meats/grain products as opposed to stuff like coffee and sugar.

Some types of foods did not suffer inflation either, I didn't notice inflating coffee prices as far as I can see here.

True. Conceded.

[Alan Bolte]

I don't know where you live. Here, the price only got upwards for the last 20 years.

Do you mean the real (inflation-adjusted) price or the nominal price? Of course, adjusting for inflation is a complicated issue in itself, so I suppose the real question is how the ratio of food price to median wage (or household income, your pick) has changed. Things were pretty steady here for a long time, AFAIK. I'm assuming reliable numbers for that sort of thing exist in Russia.

[The Yosemite Bear]

no, there is a solution for rising fuel and food prices....

and to think we only have to kill off the majority of the world's over population of homosapiens to do it.

which makes perfect sense from a certain sociopathic view.

[K. A. Pital]

I suppose the real question is how the ratio of food price to median wage (or household income, your pick) has changed.

Apparently rose fast in the 1990s, in the early 2000s remained stable, slightly lowered in 2000-2005 towards the median wage, but is now rising both compared to median wage and compared to the life minimum, if I'm reading my stats correctly.

[The Duchess of Zeon]

Unfortunately, even in the first world I expect that food prices will at least double in ratio to income in the next decades, and never go down, and are likely to go even higher than that. See as a percentage of income how much that people spent on food in the 19th century--if I can find any data I'll post it--and that would give you a good idea.

[Gerald Tarrant]

Increases in food price due to increased energy prices are probably permanent. Increases in food prices due to the demand created by biofuel silliness probably won't be permanent.

[K. A. Pital]

Increases in food prices due to the demand created by biofuel silliness probably won't be permanent.

I hope so, there's a great backlash against this rising now.

[The Duchess of Zeon]

Increases in food prices due to the demand created by biofuel silliness probably won't be permanent.

I hope so, there's a great backlash against this rising now.

Unfortunately, the big agribusinesses will never lower the prices once they've raised them, even if the actual cost goes down.

[Surlethe]

Increases in food price due to increased energy prices are probably permanent. Increases in food prices due to the demand created by biofuel silliness probably won't be permanent.

That, and the increased price is pushing people to open up more farmland -- there was an article in the WSJ this morning about investments in farmland in the Ukraine. Of course, there's also the fact that if prices keep rising, starvation will decrease demand, dropping the price back down. Hopefully, it won't come to that.

[K. A. Pital]

Of course, there's also the fact that if prices keep rising, starvation will decrease demand, dropping the price back down.

That sounds really cruel, but it happened before, so I guess it can happen now as well. After all, the world hadn't solved the hunger problem still.