Terry Boehm, president of the National Farmers Union, says escalating food prices have little to do with higher grain costs.
Reporters and politicians are making increasingly frequent references to high food prices– some going so far as to suggest prices are nearing record levels. But for the farmers and peasants who produce the world’s food, prices are nowhere near record highs.
In fact, what is currently happening to corn, bean, rice and wheat prices would be more accurately characterized as a rapid rise up from record lows.
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In the mid-1970s, Canadian corn prices reached $3 per bushel (Chatham, Ont.) and wheat topped $4.50 (Saskatoon, Sask.).
Since then, inflation has taken its toll on the value of a dollar. A new pick-up truck no longer costs $5,500 as it did in the mid-1970s. In fact, according to Statistics Canada and its Consumer Price Index measure of inflation, you would need $4.50 today to have the same purchasing power you got from $1 in 1974.
Adjusted for inflation, mid-1970s peak corn prices work out to more than $13 per bu. and wheat prices work out to nearly $23. While recent prices of $7 per bu. for wheat and $6 for corn are welcome, they are half or a third of what might constitute a record high.
Recent prices would not seem high at all, had we not grown used to prices that hovered near record lows. This graph (above) shows just how low prices have been in recent decades, and just how modest recent spikes actually are.
The take-home message is that recent price hikes are not unprecedented, and that current prices are nowhere near a record high.
None of the preceding, however, should be taken as a dismissal of the very real economic pain and physical hunger that recent price increases have brought to low-income families in many parts of Africa, Asia, Central America, and around the world.
For those earning just a few dollars per day, a doubling of food prices hurts–indeed, at the extreme, it can kill.
But the problem is not so much the price increases themselves–grain prices could not stay near record lows forever.
Rather, the problem is that over the past few decades we have moved hundreds of millions of peasants and farmers off the land and into growing cities.
More than 3.5 billion people now live in cities. Government and corporate policies have expelled peasants from their lands, changing them from self-provisioning food producers into dependent urban food purchasers – maximizing their vulnerability to rising food costs.
Despite farmgate prices well within the bottom third of their long-term range, many citizens in low-income countries have been hard-hit by relatively modest food price increases.
One further thing needs to be examined, however: reports that rising grain prices must lead to increases in retail food prices in rich nations.
The assertion that the price of cornflakes or bread must rise because corn and wheat prices are rising is simply a lie.
In 1974, bakeries and retailers were making and selling 40 cent loaves of bread made from $4 per bu. wheat. One bushel of wheat makes 67 loaves of bread. Hence, the farmers share of a loaf was just over a nickel.
Today, baking companies and retailers are making and selling $2.63 loaves of bread made from $7 per bu. wheat. The farmer’s share of that $2.63 loaf is about a dime (actually worth less than the nickel received in 1974).
Thus, the cost of the wheat in the bread is up five cents, but the bread itself is up $2.23. It is laughable to say that the price of bread must rise still further in order to cover rising wheat or flour costs.
A look at corn reveals the same pattern. In the mid-1970s, Kellogg’s made $1 per kilo Corn Flakes from 12 cent per kilo corn.
Today, Kellogg’s makes $6.22 per kilo Corn Flakes from 24 cent per kilo corn. A kilo of corn is up 12 cents; but a kilo of cornflakes is up more than $5.
Whether the problem is growing hunger in poor nations or escalating retail food prices in rich nations, it is an error to assert that these problems stem from higher grain and oilseed prices.
These problems stem from government and corporate policies that displace food producers from the land and make them into food purchasers in cities, from policies that enable ever-larger corporate agri-business corporations to dominate our food system and reap virtually all the profits, and policies that enable food processors and retailers to crank up food prices to consumers.
The problem is not near-record high prices for farmers: it is near-record high profits for the few large corporate players that globally dominate the food system.
