Food price controls likely, says UN

Financial Times ^ | October 29 2007 02:00 | By Javier Blas in London

[SampleMan]

This is how retail prices can go up faster and further than the wholesale prices of the ingredients.

Concerning rate of increase, that of course makes perfect sense. Now explaine a 1000% jump tied to a 100% rise.

The most realistic explanation is that there was a temporary shortage due to any number of reasons (probably tied to a price increase) that created a bidding war on available product.

If I'm correct, tortilla prices dropped back from 1000% to nearer 200% within a couple of months.

If they are still 1000% higher, then the market is being prevented from working. But for them to go to 1000% to begin with indicates government involvement.

[ctdonath2]

The Soviet Union was predominantly Russia. The fall of the Soviet Union did not completely eradicate the political structure in Russia, and of late there are indications that the “old school” style politics are coming back into play.

Recognize the difference between “they’re doing X right now” and “they were on path Y to X in the past, and today they’re on path Y again with X being the logical, predictable, and historically consistent result.”

[SampleMan]

Also, please explain why corn related foods in the U.S. did not shoot up 100%, let alone 1000%.

[LonePalm]

Mexico has their own ethanol production requirements and doesn't have the large sugar beet crop that Brazil has. The really only have corn.

The US has plenty of corn relative to its domestic food and feed requirements even at the increased prices. Mexico does not. My best guess is that there are some governmental regulations (tariffs, etc.) preventing a free flow of product between the US and Mexico. Things have gotten so bad that farmers have started planting corn instead of Blue Agave, the plant that tequila is made from. This will aggravate tequila prices for the next several years.

Garde la Foi, mes amis! Nous nous sommes les sauveurs de la République! Maintenant et Toujours!
(Keep the Faith, my friends! We are the saviors of the Republic! Now and Forever!)
LonePalm, le Républicain du verre cassé (The Broken Glass Republican)

[SampleMan]

Also keep in mind that the 100% increase was from $2/bushel in 2006, historically low, even for corn. FYI corn hit $2 for the first time in 1917, without any adjustment for inflation. Corn is an unbelievably stagnant commodity that steps up every 30-40 years. The attached chart clearly shows that $4 is long over due.

[Little Ray]

They work great - they cause shortages and make the black market really, really, lucrative.

[Old Professer]

Carbon taxes will fix it without resorting to that.

[SampleMan]

My best guess is that there are some governmental regulations (tariffs, etc.) preventing a free flow of product between the US and Mexico.

And thus it is a government induced problem and has very little to due with a price increase on the commodity. That's my point.