It’s a dramatic turn for a man who grew up incubating chicks under his bed, and one that shows why farmers, food economists and others conclude that the world may be entering an era of steadily rising food prices. As developing countries become richer, so do their diets, shifting from traditional staples such as rice and wheat to meat and dairy products, which require more grain as feedstock. That trend, along with the increasing use of corn in fuel, is taxing world grain supplies.
So far, that has been a boon to the United States. China relies on American farmers in particular for soybeans to use in animal feed. Last year, total U.S. soy exports were nearly $20 billion — triple the level of a decade ago.
And in general, rising prices for staple commodities such as wheat have less of an impact on consumer prices in the United States and other developed countries, where people eat more processed foods, than in developing economies. The wheat in a grocery store loaf of bread, for example, contributes only a small fraction of the final price; the rest reflects the energy, labor, shipping and other costs involved in its preparation.
But eventually, higher commodity costs will pass through to consumers. More expensive corn and soy ultimately mean more expensive dairy products and meat.
According to the most recent data, food prices have been rising about 3 percent a year in the United States — faster than inflation overall. The cost of food prepared at home — reflecting prices at grocery stores, as opposed to restaurants — has been increasing even more quickly.
For China, the world’s most populous country and now its second-largest economy, changes in food consumption are happening fast. In a nation where the word for rice is synonymous with food, people are eating less rice and other grains, preferring pork, fish and, to Liu’s delight, chicken. Pig herds are swelling, and demand for some dairy products has been climbing 20 percent a year. Chinese imports of soybeans, a key animal feed, are booming.
“We are keeping up with the world,” said Liu, who migrated to Beijing from the countryside 30 years ago. He once roamed the streets selling baby chicks out of a bucket. Then he and a veterinarian named Zhang Huaicheng took over a bankrupt state-owned chicken farm. The pair specialize in brood hens, incubating millions of eggs a year into hatchlings for sale to other farmers who want to produce eggs or broilers.
Diminished reserves
World food prices climbed to record highs this year after drought and flooding reduced harvests in major producers such as Australia and Russia. Although prices have come down somewhat, analysts noted a decline in key reserves and other evidence that markets for basic food commodities may now be persistently tight.
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