Money Talks is a collection of daily columns from The Business Network, which airs weekday mornings on CBC Radio One at 5:45 a.m. ET (6:15 a.m. ET in N.L.).

By Jim Jubak is senior markets editor for MSN Money.
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Argentina, Russia, the Ukraine, India, Viet Nam. That's just a partial list of countries that have limited exports of wheat, rice, and other grains.

The goal is to stop runaway food inflation, but limiting exports will, in fact, drive global food prices even higher. Speculators are the big winners since the less grain there is on world markets, the more hoarding and panic buying will drive prices higher and higher.

Over the last year grain prices have climbed at a stunning rate. On Apr. 3, 2008, corn for May delivery closed at $6 a bushel; a year ago it closed at $3.46. That's a jump of 73 per cent in a year. In the same period, the price of a contract for soybeans increased by 65 per cent and wheat climbed 123 per cent.

No wonder my favorite neighborhood pizza guy in New York City has raised his price for a plain cheese slice by 50 per cent in the last few months.

But while a jump in price like that is painful to me, food inflation is literally life and death for hundreds of millions in the world's developing countries. In February, food prices in China were up 23 per cent from February 2007. In a year the price of pork had climbed 63 per cent, vegetables 46 per cent, and edible cooking oil 41 per cent.

India, Argentina, Egypt, Viet Nam, the Philippines, Mexico, Cambodia, and others are caught up in global food inflation.

Many of these countries have slapped on export controls in an effort to keep more of what they grow at home. On Mar. 28, for example, Viet Nam, the world's second largest rice exporter after Thailand, cut rice exports by 22 per cent. Inflation hit 16 per cent in Viet Nam in the first quarter of 2008 and food prices specifically soared by 22 per cent.

At the same time, they've lowered their tariffs on imported grain in an effort attract more of the world's limited supply. But, of course, with so many countries cutting down on what they export, there isn't much grain out there in world markets for these lower tariffs to entice into hungry markets.

Export restrictions have, in fact, made thin markets even thinner by reducing global supplies--and that has increased the power of speculators to move these markets. Even before the latest export restrictions from Viet Nam and India, the global rice trade had just about come to a dead stop because much of what was for sale was controlled by speculators who wanted to hold on until they saw how high prices would go.

The very efforts intended to reduce grain prices are instead likely to keep them climbing.

-- Jim Jubak

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