Increase in food prices spurs fear, growing hunger

Not long ago I saw a report on NBC from a roving correspondent who had managed to get into the island nation of Haiti despite entry restrictions on reporters by the government, which is trying to hide a terrible situation.
 
Haiti, located in the Caribbean, is one of the poorest nations in the world. Many of the residents struggle for survival daily, but recently the situation has gotten worse due to the soaring price of food.
 
Haitians, who cannot afford to pay for the food, are eating clay just to have something to fill their bellies. Starvation looms there and the world relief agencies have appealed to other nations to help the Haitians.
 
The problem is that Haiti is not alone in facing a food price dilemma. It is a worldwide problem. There have been food riots in more that 34 nations, according to the United Nations, and some nations have stopped all food exports.
 
The U.N.'s World Food Program Friday appealed to member nations to provide hundreds of millions of dollars to help provide people with food around the world. Appeals for help are not unusual - starvation and hunger have always been a plague on mankind - but the scope of the current situation is reason for some concern.
 
The inability to get a product you want can lead to hoarding even when the supply is adequate. In some parts of the world, people either cannot afford the food they want or fear they will not be able to afford it in the future. This encourages hoarding and, in some cases, panic. 
 
Fortunately, we here in the United States have not experienced what other, poorer nations are feeling. But this week we had a hint of the food "crisis" that seems to be gripping parts of the world when some major discount membership stores started limiting purchases of rice and a few other staples.
 
Store officials said it was necessary because some people were buying huge amounts of the food staples, likely because they have heard about the situation in other parts of the world or are concerned about increasing food prices here in America. Perhaps some even want to profit from the situation by reselling products at a higher price later.
 
The reality is that there is enough food - there is no need for panic - but it is getting more expensive, even for Americans, who have seen their grocery bills rising dramatically in recent months. Some in America are feeling this food pinch and are having to make adjustments in their other spending.
 
But Americans are fortunate. On average, they have traditionally spent less than 10 percent of their income on food. In other nations it can be much higher, as much as 40 percent or more. The rising price of food is not nearly so abstract in those nations.
 
The most direct culprit in all this, observers say, is the price of petroleum. Not only does it make it more expensive to drive our family cars, but it makes it more expensive to produce the food and to ship it where it needs to go. The price of fuel is having a dramatic ripple effect on many areas of our lives.
 
Another factor is that Third World nations are getting more prosperous. Their citizens can afford and want more and better food, causing increased demand.
 
Still another factor being blamed for food price increases is government-mandated and subsidized production of ethanol - in itself an attempt to offset dependence on petroleum. In America, that often means conversion of corn to fuel. Some farmers have found the corn-to-fuel formula so profitable that they have abandoned other crops.
 
What can be done?
 
One big thing would be to increase the supply of petroleum. As Third World nations prosper, it increases demand for a limited supply. Exploration and production of oil and natural gas have been artificially limited by environmental concerns. That needs to change.
 
One reality, however, is that fuel prices - at least here in America - have long been artificially low. That is now changing and there will be some unavoidable pain as our economy adjusts. In the meantime, higher prices will encourage a search for cheaper alternatives to petroleum.
 
Increased demand for food and pressure on pricing are also an inevitable effect of increased prosperity in places like China, the world's most populous nation. Eventually, a new balance between demand, supply and price will be established - assuming governments do not step in to try to impose their own artificial balance instead of letting the marketplace establish it.
 
As for ethanol, mandates and subsidies need to end. These unbalance supply and demand. Let the free market determine ethanol's success or failure. The ethanol situation is an example of government interference in agriculture which supposedly benefits farmers and consumers but in reality often makes their lives  worse.
 
Those who are starving or hunger around the world need to be helped. Private charity can play a big part in this, as it has in the past. It is the most efficient and cost-effective way to deal with need, assuming governments will get out of the way and allow them to provide the necessary help.


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Terry Ross is editor of The Sun. E-mail him at tross@yumasun.com or phone him at 539-6870.