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Jump in crop prices could signal 'chronic food crisis'

Published: Friday, Aug. 3 2012 11:23 a.m. MDT

The jump in crop prices may be a shadow of things to come, as a chronic food crisis could follow over the next 40 years, money manager Jeremy Grantham of Grantham, Mayo, Van Otterloo & Co. told CNBC.

We are "about five years into a chronic global food crisis that is unlikely to fade for many decades, at least until the global population has considerably declined from its likely peak of over nine billion in 2050," Grantham wrote in his recent quarterly letter to investors, according to the CNBC article.

The latest jump in prices for soybeans, wheat and corn is the result of the drought in the Midwest, according to the article. But there are other reasons for the price hikes, Grantham told CNBC. There's a rapidly increasing demand for food from a growing middle class that could have some effect, but there are additional factors. Falling grain production, tainted water, growing costs of fuel and fertilizer, and global climate change were cited by Grantham as reasons for the possible future chronic food crisis..

"The ramifications of a global food crisis have already begun and were a key component of the Arab spring revolutions," James Iuorio of TJM Institutional services said in response to Grantham's investor letter.

EMAIL: bbullock@desnews.com

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