Touch the Soil News #772 (feature photo public domain – hungry Somali children wait for food aid)
The FAO (Food and Agriculture Organization of the United Nations) keeps track of the price of basic foodstuffs. It is no secret that many folks have difficulty translating their labor and work ethic into money to buy food. An increase in the price of food can add tens of millions of people to the ranks of the starving almost overnight.
The FAO established a Food Price index that started out in its base year (2004) at 100. Today, the index stands at 179.1 – an almost 80 percent increase over the last 13 years. However, in just the last three (3) months, the index has gone from 168.9 to 179.1 (a dramatic jump of six (6) percent. The index follows five (5) basic food groups to include cereals (grains), vegetable oil, dairy products, meat and sugar.
So what does the FAO attribute the cause of the food price hikes to? The first cause is supply constraints – a combination of more people (world population increases by about 75 million a year) and production challenges including droughts.
The second cause is related to the financial world and is what the FAO calls currency movements. So what would cause a currency movement? The best example is here in the United States and the efforts by the Federal Reserve Bank to raise interest rates. A rise in interest rates causes the value of the dollar to go up compared to other currencies. So if you are on a meager diet, and the country you are in imports food and grains from America, the rise of the American dollar could contribute to your hunger. Raising the interest rates also hurts American farmers as what they have to export becomes more expensive and they can lose markets.
Following is a video on the recent announcement by the Federal Reserve Bank to raise interest rates. By viewing the video, one becomes aware that issues related to food and eating is not of concern in the larger financial picture. One must also ask – to what extent do rising interest rates contribute to hunger here at home?