[Marxism] Food prices rise, living standards fall for US families

[Greg McDonald <sabocat59@xxxxxxx>]

World Socialist Web Site www.wsws.org

WSWS : News & Analysis : North America
Food prices rise, living standards fall for US families
By Naomi Spencer
8 December 2007

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Living expenses in the US have risen dramatically in the past few  
years, in ways that are not reflected by official measures of  
inflation or considered in already grim economic outlooks for the  
coming year. Soaring energy costs and a spike in the costs of basic  
foods relative to wages have had a significant impact on living  
standards for working class families already hurt by the ongoing  
collapse of the housing market and tightened credit market. US core  
inflation—a measure that excludes energy and food—has risen by 2.2  
percent in 2007. Retail food prices, however, have risen by 5.5  
percent in the first 10 months of 2007, according to the Labor  
Department, and energy has increased by 12.3 percent over the same  
period. Continuing the upward trend since early 2002, petroleum-based  
energy costs increased at a 20.6 percent annual rate in 2007.

Prices of certain goods have risen drastically. Milk prices have  
risen nearly 20 percent so far this year; the price of eggs has  
jumped by more than 42 percent since October 2006. Likewise, a study  
published December 5 from the University of Washington found fresh  
fruit and vegetable prices have risen by 20 percent in the past two  
years.

One immediate consequence is a decline in the quality of food  
available within household budgets already strapped by steeply rising  
energy prices. The University of Washington study, published in the  
December issue of the Journal of the American Dietetic Association,  
tracked price changes in 370 foods in Seattle-area supermarkets over  
two years.

Significantly, the study notes that the recommended diet, including a  
variety of less calorie-dense foods, now costs upwards of $36 a day.  
In comparison, a 2,000-calorie diet consisting of junk food would  
cost just $3.52 per day.

Nearly 26 million people in the US depend on the federal Food Stamp  
program each month, which, like all federal assistance programs, has  
not risen commensurate to inflation. The average food stamp  
allocation amounts to $3 a day, and approximately 800,000 recipients  
are allotted only $10 in food assistance per month, a minimum that  
has not increased in three decades.

According to the University of Washington study, the average American  
currently spends about $7 a day on food, while low-income Americans  
spend only $4 a day, indicating that millions are already making  
enormous compromises in their nutrition and long-term health.

“That the cost of healthful foods is outpacing inflation is a major  
problem,” lead researcher at the University of Washington’s Center  
for Public Health, Adam Drewnowski, noted in a December 4 press  
release. “The gap between what we say people should eat and what they  
can afford is becoming unacceptably wide. If grains, sugars and fats  
are the only affordable foods left, how are we to handle the obesity  
epidemic?”

“We are an overfed but undernourished nation.... If you have $3 to  
feed yourself, your choices gravitate toward foods which give you the  
most calories per dollar,’’ Drewnowski told the New York Times  
December 5. “Vegetables and fruits are rapidly becoming luxury goods.”

What is behind food price increases? There are a number of complex  
and interrelated factors driving up the cost of food worldwide,  
including stock market speculation over commodities; the economic  
growth of China and India and a demographic shift of the world’s  
population toward urban rather than rural areas; corporate  
consolidation of agricultural production; and ethanol production in  
the United States.

USA Today reported December 3 that the current rise in prices on  
commodities including oil, grains, crops processed for fuel, steel  
and other raw materials was at the highest sustained rate since the  
late 1970s and early 1980s, a period of economic crisis directly  
related to commodity inflation.

“Investment banks are scrambling to hire commodity traders and  
analysts, even as they lay off thousands of existing employees,” the  
paper noted; in the midst of housing market collapse, the Federal  
Reserve has been attempting to contain inflation “even while pumping  
money into the nation’s banking system.”

However, the predictable result of federal supplementation of the  
financial sector has been the shift of rampant speculation from the  
credit and housing markets into commodities, resulting in increased  
prices on raw materials that are passed onto consumers in inflated  
prices.

In addition to the effects of speculation on the market, food prices  
have been pushed up by the increasing global demand for fuel and  
conflicts over strategic control of resources. Transportation and  
processing costs for all other commodities tie in to the price of  
oil. Demand for oil and other raw materials has risen in China, India  
and other areas experiencing rapid industrial growth. Another aspect  
of such industrialization is urbanization of the world’s poor, which  
has distanced millions from agricultural production and increased the  
need for ready-made and processed foods.

Ethanol, a fuel produced from a variety of staple crops and added to  
gasoline in the United States, has been a primary driver of global  
grain prices in the past year. The Bush administration has funneled  
billions of dollars in subsidies into the low-yielding and acreage- 
intensive corn-based ethanol program, pushing the price of feed corn  
to more than $175 per metric ton, a world record.

A December 6 report from the Economist noted that, while corn has  
since scaled back to $150 per ton, prices remain 50 percent above the  
2006 average. The US is by far the world’s largest supplier of grain.  
However, in 2007, about a third of the US corn harvest went to  
ethanol production, according to the Economist report, surpassing the  
amount of corn exported annually.

Higher corn prices and demand for biofuel production have  
substantially increased the cost of raising cattle and chickens,  
resulting in continually higher meat, dairy and eggs prices.

Concentration on ethanol-bound corn has also pushed out other grain  
crops. As a result, wheat, rice and soybean prices have skyrocketed.  
Since 2000, the price of wheat has tripled, and rice and corn prices  
have doubled. In May, wheat broke $200 a ton on the world market, the  
Economist reported; by September, following a poor growing season  
that cut yields and brought supplies to a 30-year low, the price  
exceeded a record $400 per ton.

The International Food Policy Research Institute revealed on December  
4 that in 2006 global cereal stocks, and in particular wheat, were  
already at their lowest levels since the early 1980s. World cereal  
production figures are projected to reflect a rise of 6 percent for  
2007, attributable to sharp increases in corn production.

All of this has a very direct effect on the world’s population, held  
at the mercy of irrational markets and the profit motive. The World  
Bank has pointed out that the grain used to fill the tank of a large- 
size automobile with biofuel could feed an individual for an entire  
year. Billions in the poorest regions, and paradoxically, those 2.5  
billion people working in rural farming regions, are increasingly  
being confronted with a situation in which they are unable to eke out  
the barest level of subsistence against the spike in grain prices and  
extreme weather associated with climate change.

Internationally—including in the US—hunger and malnutrition are  
projected to rise in the coming years.




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