Now It’s the $6 Loaf of Bread

Policy plays a role, too. The global trade in agricultural commodities is riven with inefficiencies created by subsidies and tariffs. The high price of oil has spurred governments to encourage the production of biofuels—ethanol from corn in the United States, sugar cane in Brazil. Last year, one fifth of the U.S. corn crop was diverted to ethanol refineries. The policy response to rising food prices has aggravated the situation. China, India, Vietnam and Thailand have effectively banned rice exports. The moves, intended to build up domestic stockpiles, have further pushed world prices up. The result: higher prices (basmati rice from India in the past year has risen from $850 per ton to $2,000) and hoarding. Chains like Costco and Sam's Club are limiting the number of 20-pound bags of imported rice varieties that customers can buy.

Plenty of people can get through the day without gasoline; nobody can get through the day without food. The sharp, sudden rise in the cost of food could wind up wiping out a great deal of the recent progress made in combating poverty. When you live on $2 a day, and already spend a large chunk of your income on food, a 50 percent increase in the price of corn can be catastrophic. "In 2003, we were talking about ending world hunger—and it looked like a sensible target," says Ben Senauer, a University of Minnesota economist who studies food issues. But in February, Sheeran announced that the World Food Program, which feeds some 80 million people, would need an emergency allocation of half a billion dollars just to cover the increased cost of food aid it had already budgeted. Today's estimated shortfall: $750 million, with only about half of that pledged (including $200 million from the United States, the world's largest food-aid donor).

It may seem insensitive to discuss the impact of high food prices in a wealthy economy in which obesity is rampant. But higher grain prices are having a serious economic impact in the United States. As the U.S. economy slips into recession, the Congressional Budget Office projects that a record 28 million Americans will require food stamps this year. And since this year's allocations are based on prices as of last June, federal aid won't go as far. According to the Bureau of Labor Statistics, the prices for staple groceries have risen sharply in the past year: white bread (16.3 percent), milk (13.3 percent), eggs (29.9 percent). Americans don't starve, says Stacy Dean, director of food assistance at the Washington, D.C.-based Center on Budget and Policy Priorities, "but we have a very significant chunk of the population that isn't able to eat a bare-bones, basic healthy diet." Food pantries across the country are feeling the sting of rising food and gas prices. Barb Prather, director of the Northeast Iowa Food Bank, estimates that her group's food bills have increased 30 to 40 percent in the past year—at a time of rising demand.

A recent USA Today/Gallup poll found that 46 percent of Americans said higher grocery bills had created a personal hardship. The advent of expensive food is creating a kind of widespread sticker shock, and not just at Whole Foods. Just as a barrel of Texas crude has breached the until recently unthinkable $100 mark, New York City bagels have pierced the until recently unthinkable $1 barrier. The fact that inflation is so concentrated in nondiscretionary items, like energy and food, is sapping demand for discretionary items—like clothes and electronics.

Global leaders are waking up to the threat. "Finally, everyone is paying attention," Jacques Diouf, the Senegalese director-general of the U.N.'s Food and Agriculture Organization, told NEWSWEEK last week after leaving 10 Downing Street, where he had met with British Prime Minister Gordon Brown. Brown and French President Nicolas Sarkozy have pledged to attend a food-security summit Diouf is hosting in Rome in June.

There's likely to be little relief soon, however. The factors that could aggravate or improve the situation in the short term (which include the weather, and growth in China) are beyond policymakers' control. Crops don't grow overnight, and investments needed to make farming more efficient and productive in the developing world will take years.