Tuesday, November 06, 2007

The price of a pound of beans

The economic news from El Salvador is all about inflation.

The price of a pound of beans has risen from 50 cents to $1.25 yesterday according to La Prensa Grafica, and the price of corn has gone from 50 cents a pound to one dollar.

The price of gasoline has gone up 27% according to El Mundo. Increased fuel costs have lead the operators of bus companies throughout El Salvador to threaten a national strike unless the government increases the subsidy paid to them.

The price of a box of tomatoes which had been 20-23 dollars, now commands between 32-34 dollars according to Diario CoLatino.

The causes are varied: the demand for corn created by US ethanol policy, a bad harvest for beans and other vegetables, record world oil prices. The solutions are scarce.


Anonymous said...

this is troublesome!
this means people will literally starve, imagine what it would take to buy a pound of beans and how long it will last. how and why is this happening, is production of these basic crops stagnant in el salvador right now?

Anonymous said...

Welcome to the the world of "Free Trade" with the Gringos.

Anonymous said...

Read today's Co-Latino. Not only do Salvadorans pay high prices for the pound of beans in their basic market basket of food stuffs they're eating crap food that is not that nutritious. Gotta love it, screwed twice: high cost, crappy food.


wally said...

Does anonymous mean that were there no free trade that the price of beans and gas would not have gone up? In a world without free trade crop failures don't affect the price of a pound of beans? Explain that one, I missed something here.

Miguel Lerdo said...

Free trade cushions the impact of the bad bean harvest in El Salvador, as imports make up for some of the lost domestic production.

On the other hand, demand for ethanol in the U.S. is pushing up the world price of corn. While ethanol policies are the prime culprit, El Salvador in a theoretical Autarky would be unaffected by world demand. It doesn’t necessarily follow that the price of Salvadorian corn would lower without trade. Not long ago, people on this board were complaining that CAFTA would LOWER the price of corn and hurt small Salvadorian farmers. Where are these people now? They should be praising U.S. Ethanol policy.