Food executives are warning of more price hikes to come, even as commodities like palm oil and dairy decline writes Bloomberg in an article on food prices. Diplomats talk of the worst food crisis since World War II, with parts of Africa on the brink of famine.
This striking dissonance underscores the significant time lag for farmgate prices to feed through to those paid by households. Moreover, food commodities only make up a small proportion of the cost inputs for products such as breakfast cereals.
In the US, the farm-level portion of food consumed at home is about a quarter of the costs, and only about 5 percent when eating out, according to Joseph Glauber, a senior research fellow at the International Food Policy Research Institute. “Take bread. The cost of wheat accounts for as much as a 10th of the total cost of a loaf–the rest is driven by transporting the wheat, milling it, making and baking the bread, packaging it, and stocking grocery stores,” he said.
And as for commodity prices themselves, there is still much uncertainty in markets, said Glauber.
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