Agflation set to continue into 2011

In “Food Inflation Rising as Cooking Oil Poised to Catch Grain Gains“, Bloomberg describes a world where “agflation”, my term for soaring prices in agriculture, is set to continue soaring into 2011. The extensive article focuses on the factors supporting higher prices for cooking oil, but it also presents a perfect storm for ever higher prices across the agricultural complex:

  • Increasing wealth and soaring consumption in Brazil, China, and India
  • Water scarcity
  • Drier weather
  • Increasing production of biofuels
  • Investor demand in the face of low interest rates in developed economies like the U.S.

The “good news” is that agricultural prices have not quite reached the highs in 2008 that sparked riots in several countries:

“While the UN’s Food Price Index rose 23 percent in the 12 months ending in September, it’s still about 12 percent below the 2008 peak. Food security is of less concern now than in the last several years because grains stocks are bigger and a weakened global economy will stunt demand, Abdolreza Abbassian, a senior economist at the UN FAO, said last month.”


One Comment on “Agflation set to continue into 2011”

  1. […] many of America’s poor are finding that food inflation (something I have called “agflation” in the past) is the pest that refuses to leave. In “Rising food prices could drive up […]

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