Food Riots Next? FAO Says Food Prices Surpass Record Highs Seen During 2007-2008 Bubble

Tyler Durden's picture

The last time food prices hit ridiculous levels, the immediate outcome was global food riots in places such as Haiti and Bangladesh. Which is why distributors of riot equipment in the world's poorest countries may be in for a bumper crop as the Food and Agriculture Organization has just announced that world food prices have just surpassed the previous record last seen in 2007-2008. But it's ok: according to the centrally planning Chairman it's all good, and the inflation is really just in our heads. After all, courtesy of the recent spike in mortgage rates, home prices now have about 10% to drop, meaning even less equity will be extracted from already substantially depressed food prices.

From the FT article, which we are confident Ben Bernanke will never read:

Food prices hit a record high last month, surpassing the levels seen during the 2007-08 crisis, the UN’s Food and Agricultural Organisation said on Wednesday.

The Rome-based organisation said the increase did not constitute a crisis. But Abdolreza Abbassian, senior economist at the FAO, acknowledged that the situation was “alarming”. He added: “It will be foolish to assume this is the peak.”

The jump will increase fears about the repetition of the crisis of 2007-2008. However, poor countries have not so far seen the wave of food riots that rocked countries such as Haiti and Bangladesh two years ago, when prices of agricultural commodities jumped.

The increase in food costs will also hit developed economies, with companies from McDonald's to Kraft raising retail prices.

Higher food prices are also boosting overall inflation, which is above the preferred targets of central banks in Europe.

The FAO said its food price index, a basket tracking the wholesale cost of commodities such as wheat, corn, rice, oilseeds, dairy products, sugar and meats, jumped last month of 214.7 points – up almost 4.2 per cent from November.

The FAO food index is at its highest since the measure was first calculated in 1990. During the 2007-08 food crisis, the index reached a peak of 213.5 in June 2008.

It gets better:

However, the cost of the other critical staple, wheat, is now rising fast on the back of poor harvests.

This is a high prices situation,” said Mr Abbassian, although he pointed to the fact the costs of cereals – and particularly rice – were below the peaks set in 2007-08. “Rice and wheat are, from a global food security perspective, the critical agricultural commodities, not sugar, oilseeds or meat,” he said.

The increasing costs of sugar, whose price recently hit a 30-year high, oilseeds and meat are the main reason behind the rise in the FAO food index.

The rise of commodity prices makes it likely that the global food import bill will hit a record high in 2011, after topping $1,000bn last year for only the second time. In November, the FAO raised its 2010 forecast to $1,026bn, up almost 15 per cent from 2009 and within a whisker of a record high of $1,031bn set in 2008 during the food crisis.

Agricultural commodities prices have surged following a series of crop failures caused by bad weather. The situation was aggravated when top producers such as Russia and Ukraine imposed export restrictions, prompting importers in the Middle East and North Africa to hoard supplies.

As Zero Hedge predicted some time in October, the next bubble will be in the 3Rs: Rare Earths, Rubber and Rice. Real Earths have come (and maybe gone). Rubber is coming. Rice is now here.

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Quintus's picture

Food?  Ha!  Who cares about that?  Just look at my new iGadget that I bought with my 98th unemployment benefit check!!

Kaiser Sousa's picture

classic... i salute u sir

caconhma's picture

Fed May Keep Easing at `Full Throttle' Until Jobless Rate Falls (Bloomberg)

Who gives a shit to the Q2 $1T or a next Q3 $250T? The USA is broke. It is bankrupt. Forget about the nonsense of our children and grandchildren paying off all these debts. It is a propaganda fairy story. The only serious question are:

  • When will Asians stop lending money to America?
  • When will a WWIII start?

Almost 100 years ago, Bolsheviks thugs undertook a grand socialist experiment in Russia. It led to a civil war, a mass famine and starvation of at least 20 millions people, a network of extermination camps with another 40+ millions were slaughtered, etc., 

The experiment had ruined Russia: it became barbaric and impoverished. Prior to it, Russia was "a bread basket" for the entire Europe.

Now, the FED is "experimenting" with America and its future. Unfortunately, the results will not be any better than what took place in Russia.


It is mindbogglingly: how can people buy this shit? American cultural and moral society fabric was poisoned and perverted and everything is goes.

EscapeKey's picture

It's a little known fact that Lenin allowed peasants their own small plots of land in 1921. This development, in fact, saved the experiment. Or at least, until 1928 when Stalin started enforcing community and state farms (of which, the latter were disasters).

caconhma's picture

No, it did not save the experiment. It just helped Lenin, Trotsky, and their thugs to survive and to postpone the moment of truth.

By 1228, Stalin was not a dictator yet. He was one of the Soviet leaders. Consequently, Stalin was not the only one responsible for the mass collectivization, slaughter ,and deliberate starvation of ~20 millions of peasants. He did it together with "old Bolsheviks" whom he would start to slaughter in 1935.

This was the single greatest Stalin contribution to humanity. These thugs had to get their own medicine. Unfortunately, Stalin did not kill them all.

Red Neck Repugnicant's picture


Everyone wants to blame Bernanke for everything, and it's just fucking nonsense.  The argument from the Right is always the same - central planning, inflation, government regulation, threat of higher taxes are all to blame for whatever threatening numbers are released that particular day. 

And here we have another article where food is being priced into the stratosphere because - you guessed it - central planning.  That's Glenn Beck-ish.  While there are seeds of truth to it, it purposely ignores the real reasons so that it better fits into the "see - government is evil" theme. 

Please tell me why, in the first half of 2008, anything attached to a commodity went ballistic.  Was it central planning, then?  Why did the price of fertilizer jump out of its pants, when there is a 300 year supply of it?  Remember Potash?  Why did oil rocket to the moon, even though inventories were rising and consumption was falling?  Remember Arjun Murti - analyst at Goldman - and his "super spike" rhetoric?  Why was cocoa suddenly up 40% in the first half of 2008?  Rain in the Orinoco basin? (For those of you with 25 canned hams under your removable porch, the rain part was a joke.) 

The real reason?  It's speculators.  It's the fucking bastards at GSCI - who account for two thirds of all money in commodity index funds - pushing the price of everything attached to a commodity upward at the expense of average Americans and for the benefit of themselves.

CME averaged 10 million futures contracts a day in the Spring of 2008, up 30% from a year prior.  In 2003, there was approximately $23 billion flowing into the commodities futures market.  By 2008, that number had increased to over $250 billion - an increase of over 10X.  During that same period, the price of all commodities in the GSCI rose about 200%.  There are endless examples of this.  By every metric imaginable, the money flow from speculators is directly responsible for the rise in commodities in a major way.  80% of all money flowing into the commodity space is speculative, just looking for bids from other speculators and from those who truly need the products.  

Sure, you can blame Bernanake or China or whatever you want, but the real story are the speculators. Since Bernanke is one degree of separation from everything on planet Earth, he can always be blamed for everything if that's the agenda.  


Slim's picture

Agree - this is merely hot money flows from central bank global liquidity.  This is not supply/demand driven.  Unfortunately it's a major negative feedback look to any kind of sustained global recovery - something these same speculators are banking on.

RockyRacoon's picture

Useful.  Thank you for your comment.

geoffb's picture

What is the source of the "speculators" seemingly unending supply of investable funds to drive up prices??? Leveraged debt, backstopped by uncle sam. I doesn't take a Rand worshipper to see the involvement of the government in our present price manipulation. And in agreement with your sentiment, I wholeheartedly believe speculators would love to have the power to manipulate prices autonomously. Hence the term "corner the market".

wisefool's picture


GS-"I need 750 Billion dollars today or the world will come to an end"

Congress-"What will you do with it?"

GS-"We'll use it to make markets. with what is left over we'll pay yearly bonuses that are larger than the lifetime net worth of a typical farmer"

Congress-"What do these workers do?"

GS-"Gods work"

caconhma's picture

Yes, speculators are responsible for everything. This is a very old story. All socialist government tell the same story to its people: speculators are responsible for excessive prices and shortages.

Speaking about food, farmers must be paid: seeds, fuel, labor, transportation, storage, etc., The fking list is endless. If farmers are not paid to their satisfaction, they stop working. Then you have food shortages, riots, revolutions, you name it.

A fking union fireman or a policeman paid $100,000/yr for having no special skills and doing close to nothing. Now, you want a farmer and his family to work their ass of to feed these government union parasites? Sorry, it does not work this way.

Just ask people in present and former "communist" countries. The same is going for everybody creating value products instead of shit created by WallStreet gangsters and government bureaucratic parasites.


John Bigboote's picture

Very, very good comments on this thread.

One question though: what percent of farming in the US is done by individuals who will stop working? The conventional wisdom is that most farming is done by corporations that are granted guaranteed profits by the govt.

Dr. Porkchop's picture

If you have a backyard, start a garden and learn about organic methods. This ain't about being a 'treehugger' or a 'hippie'. This is about survival. Doing this is akin to buying PMs, it's withdrawing your support from the global food ponzi. You don't need a farm to grow food. You don't need the expensive inputs of industrial farming. Take it back.

A lot of suburban neighborhoods have strict rules about this kind of thing, but those will be abandoned when it gets bad enough. The key is to get to know your neighbors and encourage them to do the same. Building social capital is very important in tough times. You can't do it alone, that's why I don't believe in running out to a cabin in the woods with a bunch of guns. You need a real live functioning community to survive.

Cathartes Aura's picture

begin it now, where you are - agreed!

no "land"? straw bale garden in your driveway!

here's a link to a "homestead" in the city, they've been at it for 25 years, and have great pics 'n' advice:

find out if you can have a few chickens, some cities even allow a single goat - food sufficiency is important, if only to not be subject to substandard processed foodstuffs - remember, new head of the FDA is an ex MONSANTO executive!

Michael R. Taylor, J.D., was appointed Deputy Commissioner for Foods.  This was announced on the FDA’s website the day after the earthquake in Haiti.  Michael Taylor is a former top executive, lawyer and lobbyist with biotech giant Monsanto Co. He has rotated in and out of law firms, Monsanto, the USDA and FDA.


(and that was a great post RRR!)

Rick Masters's picture

I live in Philly and our union cops are bieng killed left and right and it's a disgrace. Philly cops have their bad apples just like any profession but the ones being shot are usually the ones in bad neighborhoods who are trying to stop the ever-increasing heroin trade fueled by Mexico. U.S. dope comes from Mexico not Afghanistan. But I think athey're starting salry is like $38,000 and they can die. So I understand why some people don't like unions but stick to the pencil pusher unions not the people in the line of fire (no pun intended). Well you can say wehat you want, sorry, I shouldn't tell you what to stick too. But think about that if you will. Thanks. BTW, I basically agree.

Mr Poopra's picture

If you want to go one step further, it's greed.  Just regular, plain, old fashioned greed.  We have literally ruined the world because of it and the change coming now will no longer be just another depression, but a top to bottom socioeconomic change that nobody imagined could happen 5 years ago.  Generations from now, people will go to museums to see multi billion dollar nuclear submarines that could destroy the world multiple times over, and marvel at the stupidity and propensity for violence this civilization had.

The only consolation i have is that these people have fucked things up so bad, that it can never go back to the way it was. 

Black Friday's picture


Do you now who holds those positions?

Do you know the total reach of the derivatives market?

Do you know anyone who trades on these secretive exchanges?

Did you know they have zero oversight, zero transparency and zero accountability?


"80% of all money flowing into the commodity space is speculative"

Besides hedging, is there any other reason to trade any market?

Sure, the Bernak is not to blame for everything, but...bringing a torch to check on a gas leak is a bad idea.


Red Neck Repugnicant's picture


Since you asked me five questions, allow me to pick my favorite.  


Besides hedging, is there any other reason to trade any market?

There is a major difference between speculating in the equity markets, and speculating in the commodity futures market.  I can't eat a Goldman equity certificate - speculate all you want with it - but I do need many of the products in the commodity exchange to survive, like food and oil, so keep your leveraged casino chips away from it.  

If a commodity producer like a farmer or miner wants to hedge in the CME to protect his business, fine. Likewise, if a commodity consumer like ADM, Kraft or Kelloggs wants to hedge to protect themselves, fine.  If Goldman Sachs - neither a producer nor consumer - wants to hedge and leverage their casino chips that are tethered to oil, corn, wheat, etc. - they can go fuck themselves.

The CFTC needs to return to pre-1991, when J Aron was first issued - secretly - their hedging exemptions. That fucked everything up. 

Keep you casino chips away from the necessities of everyday life, like food.  




Black Friday's picture

Well I can agree that overt speculation in commodities exchanges can be detrimental, the problem is that in order for hedging to occur, you need speculators to provide capital. There are rules to prevent what you are talking about in the commodities exchanges, there are however none in the shadowy derivatives market and you can be sure the last crisis was from that area, as will the next.

Mr Poopra's picture

"If Goldman Sachs - neither a producer nor consumer - wants to hedge and leverage their casino chips that are tethered to oil, corn, wheat, etc. - they can go fuck themselves."

Quoted for truth.  I'm genuinely excited to see the shift in language and ideas that are materializing even within this place, much less everyday individuals i cross paths with. People are waking up and it's fucking beautiful.  

EscapeKey's picture

You do realize the irony with regards to your little rant ending in a "The real reason?  It's speculators."?

In every single event of high levels of inflation EVER, the "evil speculators" have been the first to be the accused.

But apparently, perma-bulls learn NOTHING from history.

AnAnonymous's picture

Everyone wants to blame Bernanke for everything, and it's just fucking nonsense.


Save that the US, through Ben Bernanke, is running the biggest speculative experiment in the world history, causing resources depletion and organizing scarcity on a world scale.

No speculator could dream of doing better than the US. 

Red Neck Repugnicant's picture

You want the alternative?  No Fed? 

How did that work for you in the Panic of 1907, when our government went begging to Mr. J. Morgan with its tin cup? Do you know how many financial disasters occurred in the 1800's?  

I suppose you would want our government to rely on the plutocratic masters of the universe like it did in 1907, only this time it wouldn't be Mr. Morgan, it would be Lord Dimon and Lord Blankfein. While our government is undeniably controlled by the plutocrats today, the balance of scales would be tilted to the extreme and society would be their slaves.  Save your "that's what we have today" rhetoric, because survival-of-the-fittest, anarcho-capitalsim would be infinitely worse. You can't create a Garden of Eden-style ideal about capitalism if society is full of snakes. 


redrob25's picture

RNR, it is obvious you are not well educated in monetary history. You have a state sponsored view but don't appear to have attempted to educate yourself.

It is easy to criticize you based upon the apparent one sided arguments you make. Which makes for entertaining discourse, but little in the way of scholarly advancement.

Perhaps if you brought experience/knowledge from multiple sides of the argument and could argue the points on their merits, instead of towing a specific argument, you would get more positive responses here.

Red Neck Repugnicant's picture

Instead of making a sweeping generalization, simply contest one point and I'll either defend it or I'll concede it as an error. 

flattrader's picture

We can blame Greenspan who wouldn't allow any control through the CFTC.

He was beholden to his banker masters.

akak's picture

Sure, you can blame Bernanake or China or whatever you want, but the real story are the speculators.

Two questions:

1) Have you ever stopped to ask yourself WHY there is this sudden "speculation" in commodities, in the face of our collapsing financial and monetary systems?

2) Similarly, where is all the liquidity to engage in this "speculation" suddenly coming from?  I am sure that it has nothing to do with the massive market interventions, bailouts and distortions created by the Federal Reserve --- right?

Red Neck Repugnicant's picture

The "sudden" speculation is not so sudden. It's been accelerating for the past 8 years. 

I am sure that it has nothing to do with the massive market interventions, bailouts and distortions created by the Federal Reserve --- right?

Well, considering most of the 07/08 run-up in commodities happened BEFORE the uprecedented market interventions and bailouts by the Fed - yes.  

Much of the extra liquidity has come from pensions, various retirements and endowments that previously had no interest in commmodity index funds, but were pushed into them with promises of larger returns by the bastards at GSCI - much like how the SPG desk pushed pensions into CDO's which was suppose to yield better returns than treasuries.  

Before this turns into a meandering, garbled somnolent essay, I'll stop.  



akak's picture

The "sudden" speculation is not so sudden. It's been accelerating for the past 8 years. 

Untrue.  The prices of most agricultural commodities were either flat or only modestly rising (in line with the depreciation of the dollar) throughout the 2000s until late 2007 and into 2008, when they rapidly rose on the heels of the global financial crisis.

Much of the extra liquidity has come from pensions, various retirements and endowments that previously had no interest in commmodity index funds, but were pushed into them with promises of larger returns by the bastards at GSCI.

No, they were pushed into them by the downwardly-manipulated and artificially low interest rates, and hence by the destruction of returns on fixed income investments, courtesy of Soviet-style economic central planning in the guise of Federal Reserve policy.

Red Neck Repugnicant's picture

until late 2007 and into 2008, when they rapidly rose on the heels of the global financial crisis

Can you please explain this further?

Specifically, how did the "heels of the global financial crisis" contribute to commodity appreciation in 07/08. 

redrob25's picture

"Everyone wants to blame Bernanke for everything, and it's just fucking nonsense. "


RNR wants to blame speculators for everything, and it's just fucking nonsense.

akak's picture

I can remember Nixon blaming "speculators" for the rising inflation of the early 1970s, and Robert Mugabe doing the same during the incipient hyperinflation in Zimbabwe in the early 2000s.  In fact, the cases of disingenuous and outright dishonest politicians and other establishment defenders blaming the results of their currency depreciation on "speculators" are literally legion, and follow the same timeworn and manipulative pattern.

RNR, you are a hopelessly statist and ignorant lackey for the sociopathic elite whose self-serving propaganda you have apparently swallowed hook, line and sinker.

Red Neck Repugnicant's picture

Rick Santelli is a favorite among the ZH crowd. As someone who spends his days in the pits of the CME, he has a credible voice in the commodity speculation argument. 

Here he is in June 2008, defending speculators and their role in the "rolling" of oil contracts to higher and higher bids.

In a nutshell, his defense was that oil had to find its true value at the end of every month, or the roll would simply collapse.  To paraphrase him, he suggested that if speculators are to blame and the rise in oil is just a speculative bubble, oil would face a "mammoth dive."

A few days later, oil experienced a "mammoth dive," as it quickly collapsed 80% from its high.

So here is Rick Santelli admiting - although he didn't know it at the time - speculators are to blame for the oil bubble in 2008.



akak's picture

You appear determined to try and make the case that anyone here is denying that non-consumer, non-industrial speculation takes place in the commodities market, but you are the only one propping up that straw man.

Yes, of course such speculation takes place, but like a million other currency debasers and their hangers-on before you, you seem to ignore the fact that much more of what is happening in the commodities arena today is a frantic attempt by many investors to seek safety from our ongoing currency depreciation, which from all evidence threatens to accelerate, and from the real and unprecedented threat of chaos and even collapse in our financial and monetary systems.

midtowng's picture

Can't the Fed just print more rice?

velobabe's picture

don't forget cork, running out of cork in portugal. damn, no more ambiance opening up a bottle of fine wine with a fake cork or screw top.

EscapeKey's picture

Food? There's an app for that.

assumptionblindness's picture

     "Food?  There's an app for that."

Yeah, it's called SimGrub.  My avatars love it...yummy!!!

Bryan's picture

People won't acknowledge the sting of inflation until their contraceptives and electronic gadgets get too expensive.

ACjourneyman's picture

contraceptives, poor people don't use them, they are only for people who pay for poor peoples food. Add the rising cost of food to state programs and that should keep the futures green for the rest of the year, with all the more pressure on shrinking revenue.

TruthInSunshine's picture

Bernanke is either a 1) sociopathic criminal, or an 2) imbecile.

You can take your pick of the two choices, but you can't have your cake if you can't afford to buy it, in order to eat it. What's that? You can't afford bread, either?

Too bad, plebes. Bernanke is a bagman for the vultures, doing his job methodically, trembling upper lip and all.

If inflation causes the former middle class to lose faith in the system, and condemns the world's poor to starvation, that's a small price to pay in order to ensure bonuses on Wall Street and 120% of salary pensions at age 52 for government employees.

Senior citizens are going to get pissed off in the United States. Some people think this is comical, but it depends on your perspective, and from the perspective of incumbents in U.S. government in 2012, few will think it's funny as November draws nearer.

topcallingtroll's picture

I don't really care what senior citizens think.  Collectively throught government pensions, medicare, and social security they are looting the country with their ponzis and expecting their children to pay for it.  Eat cat food you senior bitchez.

TruthInSunshine's picture

My point wasn't that senior citizens should be entitled to any more consideration than the rest of us, but that they are given great consideration by politicians, as they vote in far higher %s than almost any other block of voters, and they tend to be far more sensitive to rising food and other costs of basic living (in other words, they are the first to notice, and the least likely to forgive).

It's realpolitik.

goldfish1's picture

There's looting going on but it ain't the seniors or the poor.

rwe2late's picture


The military and banking sectors are obese gluttons,

and the social and physical infrastructure sectors are starving skeletons.

60% of federal civil servants work for the military, homeland security, or the CIA. Add to that the uniformed military, and unclassified political appointees.

A trillion dollars a year is spent DIRECTLY on militarism. Add to that private weapons, privately paid security, and overseas arms dealing.

The trillions of dollars handed out to the MIC and the financial racketeers are a primary cause of the increasing inequity of wealth and power.


Professional engineers warn the roads, rails, electrical grid, sewage systems, dams, levees, water pipelines, and bridges have not been maintained, repaired, or replaced as needed. Trillions of dollars are needed just to bring the systems up to minimal standards of safety and usage. Trillions and trillions more to upgrade to world-class.

But we will continue to spend double the percentage GDP that others spend on similar healthcare in order to subsidize the insurance and health industries. We’ll allocate trillions more to keep financial speculators afloat. We’ll spend trillions more to kill illiterate peasants half-way around the world, prop up drug mobsters, and enrich warfare merchants. We’ll build more prisons, persevere in the counter-productive drug “war”, and cut back municipal schools. We’ll pay for more NSA, TSA, and Homeland policing of ourselves.

And meanwhile, people like you will recommend default and bitch about the aged receiving pensions that they have paid for with a regressive income (aka "payroll") tax.