Farming takes a hit, which means food prices could rise

The irony of it is that food prices have dropped from record highs in the summer to fairly reasonable levels, but that could put some farmers out of business. Welcome to the world of deflation.

According to The Wall Street Journal, "A slowdown in new farmland development could hinder efforts to ease the global food shortage. Earlier this year, those shortages triggered riots from Haiti to Egypt to Pakistan and raised fears of permanently higher prices for basic foodstuffs."

Everyone assumed that a recession would move food prices lower or at least keep them at current levels. Budgets that were strained by high commodities prices might gets some relief which they will need as employment and consumer prices fall.

The problems may be especially acute in the US where some farmers have been making a fortune off corn due to feed demand and ethanol. Many of those farmers decided to expand, take on more debt, and buy new equipment. The price of corn has dropped like a rock over the last five months. How are those farmers going to keep up with the debt service? In many cases, they won't.

Get ready to pay more for an ear of corns and a loaf of bread. Farm failures are sending food prices back up.

Douglas A. McIntyre is an editor at 24/7 Wall St.