Smith discusses whether we'll see similar food shortages and unrest in the U.S.
Video - Jan 14, 2011 - Text from Youtube page - Craig Smith with Neil Cavuto discussing the Tunisian riots over food prices and whether America is headed for the same fate. US consumer prices have been surging in recent months and some wonder if we are headed for the biggest spike in inflation in our history. Craig discusses why the tools in our arsenal, traditionally used to fight inflation, will no longer work.
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Food Prices Causing Riots in Africa Stoke Record U.S. Farm Economy Growth
The same record food prices causing riots in Algeria and export bans in India are allowing President Barack Obama to combine the biggest-ever U.S. farm exports with the tamest inflation since the 1960s.
Global food costs jumped 25 percent last year to an all- time high in December, according to the United Nations. Countries probably spent at least $1 trillion on imports, with the poorest paying as much as 20 percent more than in 2009, the UN says. In the U.S., the largest exporter, retail food rose 1.5 percent last year and will gain as little as 2 percent in 2011, the Department of Agriculture estimates.
Governments from Beijing to Belgrade are boosting imports, limiting sales or releasing stockpiles to curb food inflation. Higher prices will push U.S. agricultural exports up 16 percent to a record $126.5 billion this year, according to a USDA forecast. While U.S. consumers haven’t been squeezed so far, grocers from Winn-Dixie Stores Inc. to SuperValu Inc. have said they plan increases. Commodities will keep rising, according to a Bloomberg survey of more than 100 analysts and traders.
“We are absolutely spoiled,” said Jason Britt, president of Central States Commodities Inc., a research and analysis company in Kansas City, Missouri. “We have the luxury that we spend a small percentage on food. But I wouldn’t be surprised to see larger bites of our incomes used.”
Algeria, Tunisia
Unrest is starting again. Three people were killed and 420 injured in protests over milk and flour costs in Algeria this month. Tunisian President Zine El Abidine Ben Ali tried to end a month of protests by promising lower prices for bread, milk and sugar, before handing over power to his prime minister on Jan. 14 and leaving the country.
The Serbian government said Jan. 10 it will consider an export duty on wheat to discourage shipments. South Korea said the following day it plans to increase the supply of some food products to help damp prices.
India, home to 1.2 billion people, halted onion exports in December after prices more than doubled in a year. Opposition parties have said they plan nationwide protests. China sold commodities including sugar and corn from strategic reserves last year to contain inflation that reached 5.1 percent in November, the most in 28 months.
No such problems are emerging in the U.S. for now. Consumer prices will rise 1.5 percent this year, compared with 1.6 percent in 2010, according to the median of as many as 61 economists’ estimates compiled by Bloomberg. While the USDA is forecasting gains in retail food prices of 2 percent to 3 percent in 2011, even at the top of that range the gains would still be below the average over the last decade.
“We are a food-abundant country and the last place where food inflation is going to rise,” said Erick Erickson, an economist at the Washington-based U.S. Grains Council, which promotes crop exports. “We have such a rich and robust food- supply situation compared to other countries.”
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http://www.bloomberg.com/news/2011-01-18/record-food-prices-causing-africa-riots-stoke-u-s-farmers-export-gains.html
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