Rice-a-roni economics

Have you noticed the news in the last week that the price of rice has risen by 30% very recently.   I am not smart enough to figure at all the implications of that yet, but you can count on that having an effect on you and your daily life.   Not only will you paella and pilaf cost more but there will be other costs too.

Let’s see,,,,figure, what?, over 2 billion people at a minimum use rice as their staple diet in China, India, Indonesia, Japan and the Philippines.   They work to produce so many of those goodies you like to buy at Wal-Mart or Best Buy.  Now their cost of existence has risen dramatically.   Don’t believe for a minute that those costs will be contained right there in the East.  It will spread.

Combine that with the cost for corn which has also undergone a significant rise in the last year and price pressure will mount on many products.  Of course the increase cost for corn is mostly artificial due to the ethanol craze that the politicos are all promoting.   As an aside I find it interesting that it takes about 10 gals of ethanol to do the job of 7 gals of gasoline.  MMMM, but we are assured it is best for the economy and the environment.   Do your own research if you think that is off, but I believe you will find it true that ethanol is not as efficient as gasoline by a telling margin.

In ancient Rome the price of grain would often fluctuate depending of the latest rumors of war, drought or storms at sea.  Even without the Internet, some ships were faster than others and there were  speculators who would invest or divest based on the latest news of the “grain ships” as they were called.  They made seasonal voyages from Egypt and Sicily with the harvest and Rome was dependent on those supplies.   A shortage real or even perceived would dramatically affect the price of bread and therefore the mood of the populace.  It wasn’t just circuses remember but bread and circuses that bought the public favor.

Because so many people in our global economy have and will be impacted by the rice rise, it will have its ripple effects.  Where do you think that cost will come to rest? 

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Filed under Economics, Foreign Affairs, government, Politics

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