General Mills reported a 51% increase in quarterly earnings due to "fewer charges, higher pricing and a more favorable product mix" and that "gross margin rose to 37.5% from 36%, thanks to higher prices." The company said "consumers will continue to see high prices in the grocery aisle as commodity costs soar."

No kidding. A couple of weeks ago I bought stuff to make taco salads. The bill was almost $40. I paid $5 for three Grainger Co. tomatoes.

Higher food prices and volatility in commodity markets are here to stay, according to a new report by the OECD and the UN Food and Agriculture Organisation (FAO).

A referenced OECD/FAO report on price volatility says "there is disagreement about the role of financial speculation as a driver of agricultural commodity price increases and volatility. While analysts argue about whether financial speculation has been a major factor, most agree that increased participation by non-commercial actors such as index funds, swap dealers and money managers in financial markets probably acted to amplify short term price swings and could have contributed to the formation of price bubbles in some situations."

The report further states that some analysts believe speculation has little impact, but "other analysts stress that the large amount of money invested in commodity futures by financial investors has amplified price movements to an extent which cannot be explained by market fundamentals."

The report recommends more regulation of commodities futures and derivatives, saying "there is widespread agreement that for agricultural commodity derivatives markets to function well, and as intended in terms of hedging and price discovery, appropriate regulation needs to be in place across all relevant futures exchanges and markets. In particular, there is need for greater transparency about transactions across futures markets and especially across over-the-counter (OTC) markets, where transactions take place off the regulated commodity exchanges." The report notes that "the specific nature of the regulatory framework for futures exchanges and OTC markets, whether for agriculture or other commodities, is an issue best addressed by financial market regulators."

Closer to home, Food City is fighting higher food prices by "locking down" prices on 10,000 items through Labor Day. According to a press release, the company has negotiated pricing with local growers and national suppliers.

Maybe the local growers will include Grangier Co. tomato growers.

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