As parts of the world starve and seethe, some American farmers and businesses are reaping record profits. Too bad you are paying more for your cereal.

What Saudi Arabia is to oil, the United States is to food: one of the largest producers and exporters whose production moves global markets. When prices skyrocket, as they have in recent months, many Americans benefit, from farmers and exporters to the companies that produce seeds, fertilizer and tractors.
“The United States is a big net winner,” according to Roger Kubarych, chief U.S. economist of UniCredit Group, a large European investment bank. “We have the capacity to increase production and exploit economies of scale,” a power that few other countries enjoy.
What is benefiting the U.S. has created chaos internationally. Deadly food riots have broken out around the world, from Haiti to Egypt, Mozambique to Bangladesh. Governments have imposed food rationing: The Philippines is rationing rice and China is controlling the price of cooking oil, grain, meat, milk and eggs. Export countries as different as Argentina (wheat) and Vietnam (rice) have begun to hoard scarce supplies, leaving traditional buyers scrambling for replacement sources.
All of this has stemmed from a perfect storm of bad harvests in some producing countries, crippling drought in Australia and elsewhere, soaring demand for bio fuels which effectively convert food to energy and steadily rising consumption of high-protein food in countries like China and India.
Watch our on the street videos from both sides of the argument: the farmers who are getting more for their products and the consumers who are shocked at what they have to pay in the store. Over the past year, wheat prices have increased by 120 percent. The price of rice has increased 75 percent during the last three months alone. Corn and soybean prices hover around record levels. And with historically low inventories, food experts agree that prices are likely to remain high for some time.
Those high prices are music to the ears of many American farmers.
In February, the Department of Agriculture’s chief economist, Joseph Glauber, said that “the stage seems set for another year of prosperity and growth.”
But some farmers are seeing costs outpace prices. Rising grain prices, for example, are squeezing meat producers. According to Dave Warner of the Pork Producers Council, “pork farmers have lost $2.1 billion in the last 6 months” after more than three years of profits.
Overall, however, the government is forecasting higher incomes for farmers after record earnings last year.
Part of the benefit is realized through rising exports. Agricultural exports jumped 27 percent in 2007 to $90 billion, and are currently running at a rate of $10 billion per month. In addition, American agricultural machinery, seeds and fertilizer companies are seeing rising demand, and U.S. agribusiness giants are generating strong profits.
Of course, not all Americans are winners. Retail prices on staple foods rose by double-digit percentages over the last year, according to the Bureau of Labor Statistics. The cost of milk rose 26 percent, eggs increased 40 percent, and orange juice is up 12 percent—all part of the biggest American food inflation in more than 17 years.
Along with soaring energy prices, the result is that many households are curtailing non-essential spending. Roughly 14 percent of the typical urban household budget is spent on food and another ten percent on energy. That leaves less and less for other spending, and is part of the reason the recession—at least for almost everyone not tied to the farm—is gaining strength.
In our interactive graphic, discover who wins and loses in the global food fight, from agribusinesses to farmers to consumers.