The irony is that with prices so high, it almost becomes economic for Saudi Arabia to continue producing close to 3 million tons of wheat a year, even though it requires massive amounts of very expensive water, which comes from desalination plants.

It never made financial sense for the desert kingdom of Saudi Arabia to grow wheat, at least in normal times. But these are no longer normal times. Last week, the U.N.'s World Food Program, the globe's main provider of food aid, warned that it would soon have to start rationing deliveries.

This is not just bad news for countries like Afghanistan and Ethiopia that depend on its supplies, and for Palestinians who have just seen up to 90 percent of their crops wiped out by extraordinary frosts and cold weather.

It's grim news for everybody. The global economy is just about coping with the sub-prime crisis, the fall of the dollar and oil at $102 a barrel. But the inflationary surge in the costs of food, which now dwarfs the rise in oil prices, could prove to be the final straw.

World grain reserves are at their lowest levels since records were first kept back in 1960, and the U.S. stockpile had not been this low since 1948.

This problem has been coming for some time, driven by three separate factors. The first is overall population increase. The second is that emergent economies like China and India are climbing up the prosperity chain and demanding more meat protein, which takes eight times as much land to produce as vegetable protein. The third is that short-sighted government subsidies for biofuels is eroding the amount of crops available for eating.

This is already having important political effects around the world. Pakistan has re-introduced food ration cards, an unpopular and crisis-driven move that has contributed to the unpopularity of President Pervez Musharraf and helps explain his party's recent stinging electoral defeat.

Egypt has extended its own food rationing system, and the Indian government is straining to maintain its food price subsidy system as the costs soar. China and Russia are imposing price controls, and Argentina and Vietnam are reducing supplies to the world market through rationing and higher export taxes.

Some food industry executives are already starting to use the dreaded F word for Famine. This could make Saudi Arabia reconsider its decision to stop growing wheat and start importing some 3 million tons a year. It should not. With intelligent use of arable land for food crops, suitable irrigation and seed technology and an end to market-distorting farm subsidies, the world can produce enough food. It is a political problem we face, rather than a food shortage.