U.N.: Food prices at 20-year high

ST. LOUIS (AP) — Prices for major crops climbed Thursday as a U.N. agency said food costs are now at their highest point since the agency began tracking them 20 years ago.

Global prices have surged 2.2 percent just in the past month, according to the U.N.’s Food and Agriculture Organization in Rome. The FAO’s index, which measures the price of staple food items and big commercial crops like corn and soybeans, reached its highest level since 1990.

The price increases have been driven by cereals, meat and dairy products. After rising for eight months, global prices of corn, wheat and soybeans are near record levels set in 2008, when riots erupted in countries like Haiti and U.S. food prices jumped.

U.S. consumers are relatively shielded from the higher grain costs. Average incomes are higher in the United States than in most of the world. And the cost of grain represents only a small portion of the prices U.S. consumers pay for food products. Still, U.S. prices are expected to creep up later this year for items ranging from poultry to soda to wheat bread.

In the developing world, the effects have been dire. Higher food prices have pushed an estimated 44 million people into extreme poverty. Economists think the problem could worsen as governments curtail grain exports to increase their own stockpiles.

At the heart of the problem is rising demand for crops. New middle-class consumers in China and India are eating more grain and meat than ever. At the same time, a burgeoning ethanol industry in the United States is consuming about 40 percent of the entire corn crop.

“Stock levels have run down, and that’s partly for policy reasons,” said David Hallam, director of FAO’s trade and market division, referring to mandates in the United States for how much corn-based ethanol must be used in gasoline. “There isn’t much of a cushion there.”

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