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Food prices rising, but no shortage in U.S.

News that some wholesale clubs appear to be seeing a run on food staples such as rice is raising the question of whether Americans could ever face a food shortage.
Image: Grain harvest
Food prices have risen substantially in recent years, and wheat supplies are the tightest they've been in decades.Charlie Riedel / AP file

Ask an overseas visitor what’s different about the United States, and one of the first things you’ll often hear about is our grocery stores — those endlessly long aisles piled high with all manner of grains, produce, meat and delicacies. For many visitors, it’s a hallmark of America’s largesse; for us, it’s a constant reminder that, whatever problems we may face here, we live in the land of plenty.

Now, news that some wholesale clubs appear to be seeing a run on food staples such as rice is raising the question of whether Americans could ever face a situation many of us can’t even fathom — a shortage of the food we take for granted.

The good news: Experts say the short answer is no.

“I really don’t see any chance of that,” said Jerry Bange, chair of the World Agriculture Outlook Board for the Department of Agriculture.

Still, that doesn’t mean Americans aren’t facing any food woes. The price of staples such as corn, wheat and rice have skyrocketed in recent years, and the cost increases are not expected to abate any time soon. For Americans, that means higher prices for everything from bread to meat, since cattle and other animals are raised on a grain-based diets.

Americans also are seeing the tightest supply of wheat since 1946, and soybean supplies also are uncommonly low. Although there is by no means a shortage, the situation could become problematic if weather patterns make for poor crops in the coming seasons.

In addition, because of free trade agreements U.S. food prices and supplies are much more dependent on what’s going on in the rest of the world — a drought in Australia or a weakening of Brazil’s currency.

Food prices are rising, and supplies are tightening, for a number of reasons. These include a growing middle class in the developing world that is buying more food, an increase in the price of fuel used to produce and transport food and a move to plant more crops for ethanol and other biofuels instead of food. Weather also has been a factor, and a weak U.S. dollar has affected the situation.

“If you just take one (of these factors) away, we wouldn’t have this,” said Chris Hurt, agricultural economist with Purdue University. “It’s because these things are happening together.”

The startling rise in food prices has prompted some countries to limit or even ban exports on rice, a mainstay of many poor peoples’ diets. That may have been a factor in last week’s news that Sam’s Club, a division of Wal-Mart Stores Inc., and warehouse club Costco Wholesale Corp. were limiting bulk rice purchases in some stores. Both chains cater to small businesses and restaurants as well as individuals.

The move had many experts scratching their heads, since even with exports bans in some foreign countries there is little concern that Americans won’t be able to find rice on supermarket shelves.

About 90 percent of the rice consumed by Americans is grown here, said Stacy Fitzgerald-Redd, director of communications for the USA Rice Federation, and the domestic rice supply is adequate. The United States also is a major rice exporter, shipping about 50 percent of its rice overseas.

Still, Fitzgerald-Redd conceded that Americans may pay more for rice as a result of the global situation.

“Do I think that rice prices will increase in the United States? That’s certainly a possibility,” she said.

In general, experts expect that tighter food supplies and even food price spikes should even out over the next few years as higher prices prompt farmers to plant more of the needed crops.

“We would have to really have some pretty severe droughts, you know, sequentially, in order to get into a situation where we could technically have a food shortage,” said John Kruse, managing director of the agriculture group for Global Insight.

Nevertheless Hurt, the agricultural economist, believes that higher food prices, like higher fuel prices, may become a fact of life for Americans in coming years. But it’s not clear how much more money Americans will have to allocate to food. Currently, Americans spend about 8 percent of their disposable income on food, or about 10 percent if beverages are factored in, Hurt said.

If price increases continue, Hurt expects to see Americans make dietary changes.

At first, that might be similar to what we’re already seeing — more families choosing to cook steak at home rather than eat it in a restaurant, for example. But further down the road, we might see Americans in general consume more fruits and vegetables, which require fewer resources to produce, and rely less on meat. Americans also may find themselves substituting cheaper foods, such as potatoes, for rice or bread.

“A number of us as consumers will have to adjust our food consumption patterns,” Hurt said.

The U.S. situation pales in comparison to what is going on elsewhere in the world, where a sharp increase in food prices has pushed millions of people closer to starvation.

“Even after these price increases that are going to ripple through the system and stay with us for a while, by world standards, we’re in great shape,” said the USDA’s Bange.

David Beckmann, president of the advocacy group Bread for the World, estimates that 100 million more people may routinely go hungry as a result of recent price spikes that are likely to become permanent. That’s on top of the approximately 850 million who were already routinely undernourished, he said.  Even in the United States, Beckmann said food banks are being swamped, and there are concerns that more American children are going without food.

Still, even worldwide Beckmann said he's more worried about people being able to afford food than about people not being able to find food.

“Both in developing countries and in our country, the problem is not that there’s not going to be food in the stores,” Beckmann said. “The problem is that some people are really poor, and there’s not going to be food in their stomachs.”