Food Price Inflation Hits Silicon Valley

[Riaz Haq]

Food Price Hikes Hit Silicon Valley
By Riaz Haq
www.riazhaq.com

The prices of rice, chappati, besan, daals, spices and almost all staples consumed by silicon valley South Asians have experienced triple digit price inflation during the last year. After reading about food price inflation and shortages of staple foods in their home countries, Pakistanis and Indians are now feeling the pinch in Silicon Valley as Basmati rice is in very short supply even with a 300% price jump. Jamsine rice, preferred by East Asians, has also disappeared from the grocery shelves at Costco stores. Costco management has decided to limit each customer to two bags of rice to control panic buying or profiteering.

Even with these dramatic price increases, the impact on their wallets from food price inflation is relatively small because Silicon Valley South Asians spend a much smaller percentage of their incomes on food than their friends and families in South Asia. Higher energy costs and the costs of various goods and services used by them everyday is causing them to be careful with their monthly budgets.

Many governments realize the possibility of civil unrest in the event of severe food shortages or famine, and some have taken minimal steps to ease the crisis in the short term, such as reducing import tariffs and putting export restrictions. On December 20, China did away with food export rebates in an effort to prevent domestic shortages. Russia, Kazakhstan, and Argentina have also implemented export controls.

According to reports from London this week, the executive director of the World Food Program, Josette Sheeran, warned that more than 100 million people will be pushed into poverty by a "silent tsunami" of sharply rising food prices. "This is the new face of hunger - the millions of people who were not in the urgent hunger category six months ago but now are," Sheeran said. "The world's misery index is rising."

The Bush administration, after sitting on the sidelines for months, is finally taking notice of the situation. The Washington Post reported today that the administration and Congress have been caught flat-footed by rapidly escalating global food prices and are scrambling to respond to a crisis that they increasingly view as a threat to U.S. national security, according to government officials, congressional staffers and human rights experts.

Among the major international concerns about "instability" leading to increased threats of "terrorism", the food price inflation and shortages of staples have now risen near the top. However, the $200m allocation by the US is much too small to deal with the global nature of this crisis. The Secretary of State Condoleezza Rice said the administration is planning “further steps to help ease the burden of rising food prices on the world’s neediest people.” Options include building more overseas storage facilities and roads to reduce food spoiling, and making the food crisis a top priority for the G-8 summit of industrialized nations in July, administration officials said. Top Senate Democrats, meanwhile, are pressing the White House to devote more money to emergency food aid — up from $350 million to $550 million — as part of a supplemental Iraq war budget package.

The consensus seems to be emerging in Washington that these are just the first steps toward a bigger commitment with a comprehensive strategy to follow soon.