Hidden cost of food just got a bit heftier

According to the FAO food index, the price of food (an average of 6 commodity group price indices including sugar and cereals) for December 2010 surpassed the previous highest in June 2008.  And, from what Abdolreza Abbassian, an economist at the UN FAO reports,

There is still room for prices to go up much higher, if, for example, the dry conditions in Argentina tend to become a drought and if we start having problems with winterkill in the northern hemisphere for the wheat crops.

With a rise in the rate of urbanisation in many countries, the imminence of food inflation, if not already present, will become reality.  There are many factors already that could send those in the red past the tipping point.  But will it be the confluence of several factors or the domino effect created by one single incident? Well, Id say the combination of many factors.  And although, the flooding in Australia makes climate change the most visible factor - there are many other factors, maybe more discreet, lurking behind the main stage. What are they? I don't know but here are my top 5 guesses (with some help from this report).

No. 5: Biofuels. I'm making a wild leap here but is there any association with the increasing cost of sugar and cereals and biofuels? No not to be the perpetual pessimist to poo poo biofuels as it is an alternative to using petrol. And you know - using too much petrol can't be good for you.

No 4: Energy and input costs. It takes a lot to keep a farm running. I should know. When Canadians don't live in igloos, we like to stay in our farm.

No. 3: Subsidies/trade policies. Now now, there is no reason to cry over spilled milk. Oh wait. There is.

No. 2: Water scarcity. Virtual water. Consumption of water is increasing. Thank you long, hot, shower (or nix that and become a smelly, dirty environmentalist saving on water use :P joking). We are also shipping off alot of our water in the form of water-demanding crops, meats etc etc
....
and the No. 1 reason belongs to...
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CLIMATE CHANGE!!
I remember a friend read this book on the food crisis and how the author predicted that this could happen in our lifetime. OUR lifetime. But fear not, the report from the Climate Change and Global Public Goods program also says that Canada is among one of the potential winners from higher food prices. Hurrah to developed countries (sarcasm). China and India already face other hurdles. Food prices will now be another one.