The Causes and Impacts of Food Price Inflation

By Hsu-Chung Fang

According to “Food Price Inflation: Causes and Impacts,” a CRS Report for Congress presented on April 10, 2008 by Specialist in Agricultural Policy, Tom Capehart and Specialist in Domestic Social Policy, Joe Richardson, higher farm commodity prices and energy costs have caused food price inflation, which in turns, has affected low income and high income families, federal funding, and food donation in the United States.

Higher farm commodity prices and energy costs have significantly increased food prices in the United States. Farm commodity prices are rising, because there is a greater demand for corn with increasing ethanol use. Catastrophic droughts in Australia and Eastern Europe and unpleasant weather condition in Canada, Western Europe, and the Ukraine have reduced global stocks of corn, wheat, and soybeans. Food scarcity leads to elevated prices. The rising incomes have also changed global food consumption. For instance, people around the world consume more meat, processed food, vegetables, and fruits but less grain based foods. In addition, the United States combats against the depreciating U.S. currency by placing higher demands and prices on U.S. exports. Food prices have also increased, because input costs have risen. With higher energy costs, the costs of transportation, processing, and retail also increase.
Food price inflation has affected low income families, high income families, federal government programs, and food donation in the United States. Low income families in the United States are on a stricter budget, because food expenditures take up a large portion of the whole expenditures. Higher income families eat more at home than at restaurants. This allows families to save money without reducing consumption but it hurts businesses. Inflation on food prices also forces federal government to provide more funding on Food Assistant Programs. Higher commodities and food prices also reduces the United States' ability to donate food to other countries.

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The food price inflation became world wide issue since 2005. The biggest issue for us is when food price is going up, but at same time our total income stay the same as last few years. Consequently, there are more and more people suffer from stavation in any where around the world even in the US or some other developed nations. I am originally from Taiwan, and there are still a lot of my friends and relatives live in Taiwan; according to them the situation in Taiwan right now is very critical, hundred of corporation because of the depression they are closed down. Thus, many people lost their jobs, houses and become homeless. The point here I try to make is that this food price infaltion crisis is not only happend in one specific contry or area but whole world. Therefore, in order to resolve this global issue, we should work together as one unit. There is no better way to find ultimate solution. Below is an article I found in the internet, and it explain why and how food price inflation affect Taiwanese people and government.

For a detailed article from the Bloomberg news service on inflation and its effects in Taiwant, you can go to the following link: