Why does food cost so much?

Why does food cost so much?

Jordan Goodman (Personal Finance Author) gives expert video advice on: Why is life so expensive?; Why are things so expensive?; How much is the cost of living expected to go up in the coming years? and more...

Food cost so much because there's a lot that goes into it that's not just the food itself. There's fertilizer and all the things the farmer has to put into the machines that they buy. Transportation is a very big part of food, getting it from the farm to the grocery store cost a lot and with oil and gas prices higher that's a major part of the cost of food these days. In addition a lot of people want organic food and that cost more to grow and uses less pesticides and so that in effect cost more as well. So food is a major part of people's expenses and it's been rising pretty sharply because of the cost of creating the food. One dramatic example is corn, corn prices have gone up a lot because corn is being used for ethanol and not just for human consumption. What that means if there's a lot more demand for it, from ethanol than in fact the price goes up and that spreads throughout our entire economy, corn is used in lots of other products, so something like that makes the price of corn go up which than makes other commodities go up because if farmers plant a lot of corn than they're going to be planting less wheat and cotton and other kinds of things so there's less of those. So that in general is why food is going up. Another factor is a demand around the world, China and India and Indonesia and other places are taking a lot of our grains and a lot of our food as well so we're supplying them around the world and we're just not able to keep up. So food is high and it's going to keep going higher.