Now That Didn't Take Long

Looks like folks were a little quick to press the panic button on food prices. This story from India reports that excellent crops, and higher plantings are already easing the food crisis in that part of the world. The story reports:

Aug. 20 (Bloomberg) -- A worldwide food crisis that sent prices of wheat, rice and corn to records and sparked riots from Haiti to Ivory Coast may be over after farmers boosted plantings, a top official in India's food ministry said.

``I don't think there's a crisis now,'' said T. Nanda Kumar, the country's food secretary, who is responsible for formulating food security policy in the world's second-most populous nation. ``Food will be available.''

...

Record soybean crops in China and India, an almost doubling of wheat production in Australia, and bigger rice harvests in Thailand and Vietnam have eased shortfalls this year.

The global production outlook for wheat and soybeans is ``very good,'' while rice is still expensive, Kumar said in a New Delhi interview Aug. 18. ``Rice is softening, but I don't think it has softened adequately.''

To be sure there's a lot that goes into the reason for the recent drop in food commodity prices from their record high levels, including a stronger US dollar, lower energy prices, and good growing weather. But, the article is clear that there's also been a real supply response in areas of the world with less developed agriculture.

I thought we'd have to wait at least until the next growing season to see a supply response to the record high prices, however apparently even the more modest price increases we saw in the early spring were enough to generate this response. The bloomberg article credits an 83 year old scientist, Monkombu Sambasivan Swaminathan, with saying, "the solution to higher farm output lies in providing better remuneration to growers." It seems he's been proven right, and even more quickly than I expected.