Young Economics.

Some Perspective on the Food & Auto Crises

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Remember all the hype about the food crisis last summer?  Major shortages worldwide, biofuels eating away at production possibilities, potash and GMO firms set to reap a bonanza.

Paying attention to the auto crisis?  Major automakers going bankrupt, plant closures and layoffs aplenty, new car prices slashed left right and center.

If you follow the news on a regular basis, I don’t think it’s possible you haven’t encountered these types of stories.  When the mainstream media focuses itself on a hot topic, it seems like you see the same headline over and over again.  You come to wonder how much worry and debate over a topic is based on substance and how much is just filler (ahem, the Swine Flu ‘scare’).  However, it appears that the amount of attention on the food and auto stories has been justified!

A few days ago, StatsCan released data on the CPI (consumer price index, measuring inflation) for the 12 months between April ’08 and April ’09 (link).  What really grabbed my attention were the figures for the food and transportation components.  Food prices grew on average by 7.1% over the year, with fruit and vegetable prices rising by 16.8% and 26.0% respectively.  Conversely, transportation prices fell 8.0% over the year, with the cost of purchasing and leasing passenger vehicles falling 8.3%.

Personally, it’s the food prices that will really hit me.  I probably spend about $10/week on each of my fruits and veggies.  That’s $480 a year, so after the price increase I’m hit with spending an extra $80.64 for fruits and $124.8 for vegetables!!!  At our incomelevels in the West, the extra burden stings but is manageable.  But what about developing nations, where people may be making only $500/year? This is not good a situation which is why stories like this keep popping up: Could Food Shortages Bring Down Civilization.

But where has the reporting on the food crisis gone since the financial crisis unfolded? Again, it appears the media got wrapped up reporting on one sexy topic.  News agencies really need to break away from tunnel vision.  However, it looks like banking won’t blow up the world so I think the public eye will soon start to turn towards something new yet again.  Hopefully it gets back to looking at how to feed the planet.

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Written by jk

May 24, 2009 at 8:33 pm

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