OK guys, you have been such help with my supplement questions. Hopefully, I can share a bit of my own expertise here
The rise in food prices within the United States is a result of serveral factors, and the extraordinary rise in food prices (75% increase in aggregate prices since 2005) in the United States this year is the reverse of the previous 30 years, food being so cheap that we become gluttonous. Now, here is why the prices are rising:
1. Agriculture inflation is based on long run changes in diet that accompany emerging markets. For example, Chinese consumers who ate 44lbs of meat in 1985 are now eating over 100lbs of meat per year. This causes an increase in demand for grain. It takes roughly 17lbs of grain to produce one lb of beef.
2. Rising prices are also self-inflicted as a result of ethanol subsidies; biofuels represent 1/3 of the corn harvest in 2007, which is a record high. This DIRECTLY effects the food market -- Fill up your SUV with ethanol and you just used enough corn to feed one person for a year. INDIRECTLY, this provides farmers with incentives to start producing corn over any other product. Farmers increase investment and production because of rising prices.
3. Even though the price of food is fundamentally determined by supply and demand, government also plays a role. Lets take the ethanol subsides for example. For one, the US is supporting a crappy version of ethanol, as a more efficient version can be imported from Brazil. But, of course, rich countries put up trade barriers to prevent competition from abroad. This leads to poorer countries enforcing price controls. Government intervention spreads like wild fire when it comes to intl trade.
4. Now, these higher prices provide a great chance for the US to reduce subsidies without hurting income for the farmers. Reducing rich country subsidies and trade barriers would help taxpayers too -- this could revive the dead-in-the-water Doha round of world trade talks, boost the world economy, which would directly help the world's poor by providing food at lower costs.