David Frum: Why 2013 Will Be a Year of Crisis
Prediction: 2013 will be a year of serious global crisis. That crisis is predictable, and in fact has already begun. It will inescapably confront the next president of the United States. Yet this emerging crisis got not a mention at the Republican National Convention in Tampa. We’ll see if the Democrats do better.
The crisis originates in this summer’s extreme weather. Almost 80% of the continental United States experienced drought conditions. Russia and Australia experienced drought as well.
The drought has ruined key crops. The corn harvest is expected to drop to the lowest level since 1995. In just July, prices for corn and wheat jumped about 25% each, prices for soybeans about 17%.
These higher grain prices will flow through to higher food prices. For consumers in developed countries, higher food prices are a burden — but in almost all cases, a manageable burden.
Farmers ‘can’t wait’ for Isaac Drought to push food prices higher Satire novel exposes hypocrisy in D.C.
Americans spend only about 10% of their after-tax incomes on food of all kinds, including restaurant meals and prepackaged foods. Surveys for Gallup find that the typical American family is spending one-third less on food today, adjusting for inflation, than in 1969.
But step outside the developed world, and the price of food suddenly becomes the single most important fact of human economic life. In poor countries, people typically spend half their incomes on food — and by “food,” they mean first and foremost bread.