Trade

Food Costs More. Are T-Shirts To Blame?

Simon Houpt of Canada's Globe and Mail tweeted recently:

This sounds like a great @planetmoney story. What your t-shirt has to do with rising food prices.

Simon's tweet sent us to a Globe and Mail story that said rising cotton prices could drive already high food prices even higher.

(Here's more on the Planet Money t-shirt, by the way.)

The basic idea: Farmers, enticed by high prices for cotton, switch from growing food to growing cotton. That decreases the supply of food, driving up food prices further.

Abdolreza Abbassian, an economist with the Food and Agriculture Organization of the United Nations, tells the Globe and Mail:

When farmers have to plant, now they have this really valuable other commodity that is not food and it's going to make them think.

According to the article, the price of cotton doubled over the last year, and it's already up 25 percent this year.

This is driven by several factors: increased demand, natural disasters and hoarding.

China, the world's largest cotton consumer, has doubled its cotton imports in a few months. Farmers, in turn, are hoarding their cotton, waiting to sell their supplies when the price is even higher.

And mother nature isn't helping. Floods in cotton producing countries like Pakistan and Australia have also decreased supply and driven up prices.

All this means that farmers may choose to grow cotton instead of another food crop. According to the FAO, corn, soybeans, and sugar may see decreases in production this summer.

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