Increase in Grain Prices Affects U.S. Food Donations
From Illinois corn to Kansas wheat, U.S. grain crops are experiencing their fastest price hike since 1990. The rise in prices is being felt not only at the grocery store, but also in international food policy, as the costs of corn, cooking oil, and other items commonly purchased for U.S. food aid programs have increased sharply. The United States is the largest single donor of food worldwide, but the volume of aid provided through its leading assistance program, Food for Peace, dropped by more than half between 2000 and 2007, to 2.4 million metric tons, in response to a 35-percent increase in the cost of agricultural commodities in the last two years.
According to the Wall Street Journal, reasons for the price climb include growing demand for grain in China, Russia, Latin America, and South America, which has reduced global stockpiles, as well as increased interest in the use of corn and other food crops to produce biofuels, particularly ethanol. At the same time, rising transportation costs have made it more expensive to ship U.S. agricultural products to countries in need, pushing the price of food aid upward.
The United States is not the only country grappling with higher food prices. Canada, Italy, and Mexico, among others, are experiencing similar trends, reflected in the cost and availability of various food products at the consumer level. Earlier this year, Mexico experienced a nationwide tortilla crisis as the cost of corn skyrocketed, pricing many of the country’s poorest consumers out of the market and steering them to less-nutritious foods options.
National food-aid policies are also a factor. For example, the United Nations Food and Agriculture Organization (FAO) reports that between 2000 and 2005, the producer price per ton of Canadian wheat rose from US$92 to $103, while the price of U.S. wheat jumped from $94 to $123. But the price increase had less of an effect on the overall volume of food donations from Canada, because its government is legally able to purchase up to 50 percent of its food aid in developing countries, and can thus save on transportation costs. U.S. food-aid policy, in contrast, forbids the purchase of any U.S. food donations outside the country, in part to support domestic producers.
The downside is that the United States is buying less food to assist the estimated 854 million people worldwide who, according to the World Food Programme, experience hunger on a regular basis. The rising cost of imported foods also poses a challenge to hunger-affected countries that are not food aid recipients, reducing their buying power relative to what they were previously able to afford.
As world food stocks—particularly surplus grain supplies—continue to shrink, it has become harder for the market to absorb shocks stemming from price volatility. In order to feed the same amount of people, donors of food aid will have to increase the scope of their giving, an unlikely prospect considering the current U.S. response to the rise in agricultural commodity prices.
Jessica Hanson, a food and agriculture intern at the Worldwatch Institute, recently completed her M.A. in International Relations at the University of Sussex, where she wrote her dissertation on global food issues.
This story was produced by Eye on Earth, a joint project of the Worldwatch Institute and the blue moon fund. View the complete archive of Eye on Earth stories, or contact Staff Writer Alana Herro at aherro [AT] worldwatch [DOT] org with your questions, comments, and story ideas.