Thursday, May 5, 2011

Commodity Price Inflation May Not Be Temporary

link here to article

We posted a previous article on population growth. This article is about declining productivity in food production. If population is growing, and incomes are increasing in emerging markets, there will be rising demand for commodities like food and energy. If productivity does not keep up with demand, then prices will continue to rise. This article reports on food production which has not kept pace with rising demand. Two reasons are discussed for declining food productivity. One is bad weather due to global warming; the other is the use of lower yielding arable land to expand production. Both may be impacting food production. The US is one of the largest producers and exporters of basic foods. It has been hard hit by rain and floods this year. It will not be a good year in the US mid-west.

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