Huge demand for corn boosting food prices
CTV.ca News Staff
Published Monday, February 14, 2011 10:26PM EST
The cost of corn is rising, and because it's the hidden ingredient in much of our food – everything from pop drinks to margarine -- that means your grocery bills could rise, too.
The U.S. Department of Agriculture warns that corn supplies are at their tightest levels in 15 years. The situation has been compounded by government incentives to boost corn-based ethanol production.
Kerry Klassen, a commodities analyst, says it could take several years for the U.S. to replenish its stocks.
"If we look at a long-term average price, I think we're going to be above the five-year average for the next crop year as well," he said.
Michael Seery, an analyst with Seery Futures, says world corn prices have also been driven up because China, with its population of 1.3 billion people, is stockpiling food staples.
"They keep buying corn," he said. "They're rationing it; they want it. They're afraid of higher prices, so even a $7 bushel, which is right now at its all-time high."
Some grocery stores have been told to expect that food prices could rise up to 10 per cent in the coming weeks -- all because the world's demand for corn is exceeding supply.
"We received a few notices from various suppliers, telling us about price increases. Some from pop suppliers, some from bread suppliers," Munther Zeid, owner of FoodFare Stores, told CTV News.
The impact of corn prices is widespread. Since corn is used to feed cattle, that means meat prices are also rising.
McDonald's was among the first major fast-food chains to announce its menu prices will soon increase. The company uses corn in almost every single one of its products.
Other chains are expected to follow suit, according to Garth Whyte, of the Canadian Restaurant and Food Services Association.
"Right now, there are record prices on commodities like corn that will put upward pressure on prices, but time will tell if this is a temporary trend or a long-term trend," he said.
The situation has become serious enough that French President Nicolas Sarkozy wants corn prices on the agenda for this weekend's G20 summit in Paris.
With a report by CTV's Richard Madan in Ottawa