Global Hunger Grows

You can file this under, to paraphrase Paul Harvey, the "just in case you don't have enough to worry about" file. Seems the world's "intelligentsia" has been fretting over various crises, except one now starting to take place -- food riots.

Ambrose Evans-Pritchard writes in the Daily Telegraph:

"The world food situation is very serious: we have seen riots in Egypt, Cameroon, Haiti and Burkina Faso," said Mr Diouf. "There is a risk that this unrest will spread in countries where 50pc to 60pc of income goes to food," he said.

Haiti's government fell over the weekend following rice and bean riots. Five died.

The global food bill has risen 57pc in the last year. Soaring freight rates make it worse. The cost of food "on the table" has jumped by 74pc in poor countries that rely on imports, according to the FAO.

I caught a bit of Gary Shilling on Larry Kudlow's CNBC show this evening. I wasn't paying close attention -- but I think he said the ethanol mania would fade. I hope so. But with Iowa being the kick-off for US Presidential elections, it may leave kicking and screaming -- ripping off taxpayers all along the way.

Comments

[George]

I've been thinking about this same issue for a few week's now. An environmental economics blog that I read touched on the potential for ethanol demand to impact food prices, especially in developing countries last year. I've been keeping an eye on the issue ever since. Now the problem is here and likely to get much worse. This is sad example of how distorting market prices can have serious unintended consequences.

John, have you connected this trend to any potential investment strategies? I've been thinking about the issue in a public policy context, but haven't been able yet to piece together how this will impact businesses and financial markets.

[John]

George: I haven't. Jim Rogers has been bullish on commodities of almost all types for years -- not just minerals but food as well. I guess if someone bought futures they made, or are making, a fortune. I have no expertise in futures, though.

Rogers came up with a commodities index some years ago, and perhaps an ETF is out there using it. Rogers was the subject of a Barron's article this week. I haven't had a chance to read it closely yet, maybe there's some information there.