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What will happen if things really get bad?

You would have to have been living under a rock for the past year to not know that food prices are on the rise. Average increases in the U.S. range form 5 percent to 8 percent with double digit increase on selected items.

Considering the U.S. has had some of the lowest food prices in the world for decades, this should not be the end of the world. Yet, judging by the reaction of American consumers, this is the worst thing that could even happen. The whining and gnashing of teeth hit a crescendo last week when the United Nations predicted food prices would stay high for the next 10 years.

The survey shows that the total cost of 16 basic grocery items in the first quarter of 2008 was $45.03, up about 8 percent, or $3.42, from the fourth quarter of 2007. Jim Sartwelle, American Farm Bureau Federation economist, said more than a third of the increased cost reported this quarter is attributed to the two oil products, corn and vegetable oil, and to mayonnaise, which is also oil-based.

“Continued strength in the wheat and cheese markets also contributed to the overall price increase for the basket of items,” Sartwelle said.

The combination of higher food prices and an economic slowdown has forced some consumers to actually think about how they spend their food dollar. The Toronto Star reported that for Peggy and David Valdez of Houston, Texas, feeding their family of four means scouring grocery ads for the best prices, taking fewer trips as a way to save gas and simply buying less food period.

Nationwide, a family of four on a moderate-cost shopping plan now spends an average of $904 each month for groceries, an $80 increase from two years ago, according to the USDA.

For the most part, Americans are not used to thinking about high food prices.

The productivity of American agriculture and the government’s long-term cheap food policy have made most Americans complacent about the supply, quality, and value of the food they buy. It has been 20 years since the last spike in food prices so most shoppers can’t remember it.  While higher prices are no fun, a little more frugality and forethought by the food shopping public may not be such a bad thing.

But if we Americans can not handle an 8 percent jump in food prices, what would we do if things really got bad. Most of the rest of the world is used to dealing with double digit jumps in prices and even food shortages. 

What would your U.S. housewife do if one day she saw milk prices double and, when visiting her favorite store, found only Shredded Wheat in the cereal aisle? Chances are she would do what so many of us do when our world goes bad, yell that the Government should do something about it.

In Washington, they are already making those plans. During a recent conversation with USDA Under Secretary of Agriculture Chuck Conner, he admitted they are working on worst case scenarios in case we would have a crop failure.

He ruled out an export embargo, but that pledge would not likely stand up in the face of overwhelming public panic.
Despite our obsession with food, we Americans are food weenies.

If the system that delivers safe, high quality, and low priced food – almost to our door – ever breaks, much of America would not have a clue of what to do.

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Gary Truitt may write to him in care of this publication.

4/9/2008