Food is becoming more expensive around the world. In fact, world food prices rose to near a record high this April as grain costs continued to increase. The cost of living in the U.S. has been rising at its fastest pace since December 2009, and Chinese consumer prices have been going up at their fastest rate since 2008.
One reason for the rise in food prices is Wall Street greed. In 1991, bankers at Goldman Sachs came up with a new kind of investment product, a derivative that tracked 24 raw materials, including food products, as part of a single mathematical formula they called the Goldman Sachs Commodity Index (GSCI).
The problem came in 1999, when the Commodities Futures Trading Commission deregulated futures markets, and bankers could take as large a position in grains as they liked -- something which had been forbidden to all but those actually involved in food production since the Great Depression.
According to Foreign Policy:
"The structure of the GSCI paid no heed to the centuries-old buy-sell/sell-buy patterns ... This imbalance undermined the innate structure of the commodities markets, requiring bankers to buy and keep buying -- no matter what the price ...
Not only does the world's food supply have to contend with constricted supply and increased demand for real grain, but investment bankers have engineered an artificial upward pull on the price of grain futures. The result: Imaginary wheat dominates the price of real wheat, as speculators (traditionally one-fifth of the market) now outnumber bona-fide hedgers four-to-one."