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But what specifically about food prices? Why are rising food costs any different from rising energy costs? First, it is clear that rising costs across the board will affect the consumer. That's just basic inflation. When it comes to rising food prices however, we are now talking about something people cannot overlook, or cut back their in their spending. In short, people need to eat.

It's Not Just Rising Food Prices

Beyond the fact that food prices are already rising at record rates, there is also a concern about the upcoming supply of food commodities. At first glance, one would imagine that the world's population will be okay when it comes to any type of renewable commodity.

In other words, while there might be less corn due to the demand for ethanol, additional acres will be planted to meet this food void. While it might take a couple of years for supply to come to the market, it will eventually arrive.

This argument, however, fails to take into account the finite amount of arable farm land and the negative impact of industrialization in developing economies. Already today, growing cities in China and India are quickly turning farmland into cities and manufacturing plants. This naturally takes away from planted acres of food.

In addition, certain types of commodities can only grow in climate specific regions. For example, one can't grow sugar cane in the arid deserts of Arizona.

The Global Food Crisis

Industrialization also impacts the amount of food people consume, because industrialization breeds wealth and wealth breeds a more lavish and substantive lifestyle (think meat, coffee, sweets...).

The net effect is more mouths are now vying for the same amount of food. So while Western economies are not even close to experiencing a food crisis yet other economies have already started to experience the impact of higher prices.

Several news articles over the weekend highlighted the fact that the Food and Agriculture Organization (FAO), a United Nations agency, just released a study saying that rising food prices will continue for the next several years.