In an “unforeseen and unprecedented” shift, the world food supply is dwindling rapidly and food prices are soaring to historic levels, the United Nations’ top food and agriculture official warned Monday.

The changes created “a very serious risk that fewer people will be able to get food,” particularly in the developing world, said Jacques Diouf, head of the United Nations Food and Agriculture Organization.

The agency’s food price index rose by more than 40 percent this year, compared with 9 percent the year before — a rate that was already unacceptable, Mr. Diouf said. New figures show that the total cost of food imported by the neediest countries rose 25 percent in the last year, to $107 million.

— a rate that was already unacceptable, Mr. Diouf said. New figures show that the total cost of food imported by the neediest countries rose 25 percent in the last year, to $107 million. At the same time, reserves of cereals are severely depleted, the agency’s records show. World wheat stores declined 11 percent this year, to the lowest level since 1980 . That corresponds with 12 weeks of the world’s total consumption, much less than the average of 18 weeks’ consumption, in storage during the 2000-2005 period.

. That corresponds with 12 weeks of the world’s total consumption, much less than the average of 18 weeks’ consumption, in storage during the 2000-2005 period. There are only 8 weeks of corn left, down from 11 weeks in the same five-year period.

Prices of wheat and oilseeds are at record highs, Mr. Diouf said Monday. Wheat prices have risen by $130 a ton, or 52 percent, since a year ago. United States wheat futures broke $10 a bushel for the first time Monday, a psychological milestone.

Mr. Diouf said the crisis was a result of a confluence of recent supply and demand factors that, he said, were here to stay.

On the supply side, the early effects of global warming have decreased crop yields in some crucial places. So has a shift away from farming for human consumption to crops for biofuels and cattle feed. Demand for grain is increasing as the world’s population grows and more is diverted to feed cattle as the population of upwardly mobile meat-eaters grows.

“We’re concerned that we are facing the perfect storm for the world’s hungry,” said Josette Sheeran, executive director of the World Food Program, in a telephone interview. She said that her agency’s food procurement costs had gone up 50 percent in the last five years and that some poor people were being “priced out of the food market .”

.” To make matters worse, high oil prices have doubled shipping costs in the last year, putting stress on poor nations that need to import food and the humanitarian agencies that provide it.

Already “unusual weather events,” linked to climate change — like drought, floods and storms — have decreased production in important exporting countries like Australia and Ukraine, Mr. Diouf said.

I have talked about this subject of resource shortages relentlessly in the blog, but now the mainstream press and 'academic studies' are seeing the strains on our food supply by a 'World of Shortages' . Our inflation this time is not due to an overheated economy like past cycles but demographic worldwide trends (the world was not built for 7 billion plus people, with >50% urbanized which is where we are headed within a decade); this is why I argue the Fed just needs to forget about inflation (it is powerless to stop the trends behind it) and work on growth. It would also help if our gosh darn politicians did not encourage programs that diverted food supply away from food and into energy, especially such inefficient things as corn ethanol but votes are votes, and they will be bought off any way they can in Iowa, to the detriment of us all. It is one thing to put sarcastic comments into a blog, but these are truly very bad things happening that our politicians are in fact encouraging (they kill the solar incentive in the recent tax bill? they keep subsidizing the bad types of energy and call this a 'victory'?) What a joke. Just like the mortgages, until it gets so terrible that wide parts of our population suffer and raise hell, then they will reverse course - and look back at these type of energy bills and say "so and so is to blame for such a bad decision". Check back in 3-4 years, trust me, this will happen.These are not things that get fixed if China GDP drops from 12% annual to 3% or US "slows down". This is what "those in the know" either don't know or are ignoring. And again we move to a 'reactive' situation than 'proactive'. I am not sure what it will take to put this on the radar, since people unable to pay for food in the lower tranches of society won't affect the investment banks in New York and thus do not require any urgent action or Fed hand holding. As I have stated, this is incrementally happening year by year (all this inflation, not just food), but now it's really starting to accelerate and affect much larger swathes of people. And this is why the economy will be issue #1, #2, and #3 by the time the general election is in full swing. I expect to see an angry electorate in fact.First, World Food Supply is Shrinking U.N. Agency Warns

Next, Food and Fuel Compete for Land

Shopping at a Whole Foods Market in suburban Chicago, Meredith Estes said food prices have jumped so much she has resorted to coupons. Charles T. Rodgers Jr., an Arkansas cattle rancher, said normal feed rations so expensive and scarce he is scrambling for alternatives. In Oregon, Jack Joyce, the owner of Rogue Ales, said the cost of barley malt has soared 88 percent this year. ( ok I have to admit I laughed at the first sentence... poor lady had to resort to coupons at Whole Foods, a very expensive place to shop for you darn yuppie types )

) For years, cheap food and feed were taken for granted in the United States. But now the price of some foods is rising sharply, and from the corridors of Washington to the aisles of neighborhood supermarkets, a blame alert is under way.

Among the favorite targets is ethanol, especially for food manufacturers and livestock farmers who seethe at government mandates for ethanol production. The ethanol boom, they contend, is raising corn prices, driving up the cost of producing dairy products and meat, and causing farmers to plant so much corn as to crowd out other crops.

The results are working their way through the marketplace, in this view, with overall consumer grocery costs up roughly 5 percent in a year and feed costs up more than 20 percent.

Now, with Congress poised to adopt a new mandate that would double the volume of ethanol made from corn, ethanol skeptics say a fateful moment has arrived, with the nation about to commit itself to decades of competition between food and fuel for the use of agricultural land.

“This is like a runaway freight train,” said Scott Faber, a lobbyist for the Grocery Manufacturers Association, who complained that ethanol has the same “magical effect” on politicians as the tooth fairy and Santa Claus have on children. “ It’s great news for corn farmers, but terrible news for consumers .”

.” But ethanol critics are not getting much traction with their argument. Last week, the Senate voted 86 to 8 for a new energy bill containing expanded ethanol mandates, and the House is expected to follow suit this week.

Experts with no stake in the argument say ethanol has indeed contributed to rising food costs, but that is only one among several factors. Higher fuel costs are driving up the expense of growing and transporting food. And strong economic growth abroad is increasing demand for agricultural commodities, allowing once-destitute people to augment their diets with meat and dairy.

It is also a tough time, politically, to make a case against ethanol. With continuing turmoil in the Middle East, sky-high gas prices and presidential candidates stumping in Iowa, the heart of the Corn Belt, a new renewable fuel standard has plenty of supporters on Capitol Hill.

“We did get whipped,” said Jay Truitt, vice president of government affairs for the National Cattlemen’s Beef Association. “We continue to be caught up in this fervor, almost spirituality, about ethanol. You can’t get anyone to consider that there is a consequence to these actions. ”

” He added, “ We think there will be a day when people ask, ‘Why in the world did we do this? ’”

The bill in Congress would increase the mandate for renewable fuels to a striking 36 billion gallons by 2022. That is far beyond a requirement on the books now for 7.5 billion gallons of ethanol by 2012. Much of the newly required ethanol could be made from agricultural wastes like corn stalks and straw, and its production would not compete directly with food production. But the proposed mandate, known as a renewable fuel standard, also calls for 15 billion gallons of ethanol made from grains, primarily corn.

Mark W. Leonard, who raises cattle and corn in western Iowa and owns a stake in several ethanol plants, said it was “absolutely essential” that the government increase the mandate for ethanol, and he urged Congress to push up the deadlines. ( clearly an unbiased opinion ) “This is a national security issue more than anything else,” said Mr. Leonard, noting the nation’s dependence on imported oil. “We need to quit sending money to people who want to blow us up.” ( of course, the fallback for everyone when questioned - the terrorists will come to our corn fields if we don't go to their corn fields first )

) “This is a national security issue more than anything else,” said Mr. Leonard, noting the nation’s dependence on imported oil. “We need to quit sending money to people who want to blow us up.” ( ) Joe Victor, vice president for marketing for Allendale, an agricultural research firm in the Chicago suburbs, said Midwestern farmers would face a pleasant quandary in the spring in deciding what to plant because wheat and soybean prices are at or near record highs and corn prices remain bullish. “Oh geez, they’ve got money galore,” he said. “The Senate vote for the energy bill was a real confidence builder for the farmer to think, ‘They are not going to pull the rug out from underneath us.’”

Feed costs have increased 25 to 30 percent in the last year, according to David Fairfield, director of feed services at the National Grain and Feed Association. He attributed virtually all of the increase to the demands of the ethanol industry

As the debate continues, one thing is certain: American shoppers are increasingly frustrated over rising prices. “It’s the staples, the cheeses, the milks and produce,” said Ms. Estes, shopping at the Chicago-area Whole Foods. “It’s going up, and my grocery bill at the end, it’s like, ‘Are you kidding me?’”

If this blog is around in 3 years, let's check back and ask in joining Mr Truitt "Why in the world did we do this?’. So when you see your politicians on local and national TV trumpeting this plan, unless you live in a corn filled state, I'd urge you to boo and hiss. And call them.

Until then I will just complain in the blog and continue to look for the people with deeper and deeper pockets (farmers) and find the items they will be throwing our tax money at (fertilizer).

What a system.