Global food crisis about to get worse

U.N. Food Agency Issues Warning on China Drought

It is not too often that Really Big News comes out in such small print. This is indeed Big News. I am sure that in the weeks to come we will get more clarification from China and from the folks that watch wheat and other crops on a global scale.

Commodity prices have been rising now for awhile. Earlier this week we heard from Paul Krugman about Droughts, Floods and Food. Food prices are going up subsantially this year. If this bad news from China is confirmed we will see even greater increases. The article notes that the Chinese corn crop which is from the same region is also threatened, but surely it will not be planted until spring in China.

The real impact will be in the developing world where there is much less margin for production and the lack of international reserves adequate to purchase grain on the open market. Fortunately Bolivia has financial reserves mainly based on petroleum income. And while the weather here has been fluky due to the La Niña effect, there does not appear to be the utter collapse that is threatening the bread basket of China. But think of all the countries who are at risk.

2011 is going to be an interesting year economically, politically and nutritionally in much of the world.