COMMENTS: The Rising Price of Bread

Economic woes continue to dominate the news agenda. This time the high price of food was Story of the Day. ABC led from inside-the-Beltway as Congress held hearings on domestic prices and President George Bush requested $770m for global food aid. CBS and NBC looked at the problem from the consumer's point of view, as more households are trying to save money by buying in bulk. Of the four days so far this week, NBC has led with an economic story each time--first fiscal stimulus, then oil prices, then GDP data, now food; ABC chose money matters three times; CBS twice.

ABC's David Wright (embargoed link) described the argument before Congress as between the baker and the farmer. The farmer is accused of driving up the cost of flour by switching his crop from wheat to corn to produce ethanol. Sen Charles Grassley, the Republican from Iowa, responded by defending his home state's agribusiness: "Take one of these kernels here. It is not something that you would sit down to your kitchen table and eat." Wright's colleague Chris Bury followed up from rural Illinois where corn farmers "reap record prices, nearly double last year's, thanks to surging world demand" yet even in such a prosperous year, federal farm subsidies to agribusiness total $5bn. On NBC, Trish Regan of CNBC, listed three other factors driving up the cost of food besides biofuels and worldwide demand: high energy prices, a weak US dollar and a global drought.

CBS sent Mark Strassmann to Costco in Atlanta. He told us that the warehouse retailer's food sales nationwide have increased almost 20% thanks to stockpiling. Buying in bulk also saves money because it requires fewer gasoline miles to the grocery store. CNBC's Regan noted the downside: stockpiling food now, when prices are high, increases demand at precisely the wrong time, driving prices up yet higher. ABC's Wright added that "coupon use is now at an all time high" with 100m more redeemed this year than last.

As for the rest of the world, ABC's Wright called the food shortage a "genuine crisis." CBS cited United Nations statistics that 37 countries face serious social unrest as a result. Mark Phillips was dispatched to Cairo for one example. He found "desperate bread lines" at the government-subsidized bakeries, whose loaves "can be the difference between eating and starving for the country's poor." Phillips explained the "unwritten deal in Egypt that the poor, while they may stay poor, will always be fed. If that deal breaks down one of the pillars of stability in the Middle East, one of the bulwarks against extremism, starts to look a lot less stable."


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