With world food prices hitting a record high in January, warning lights are flashing all around us. The potential crisis posed by world food and grain shortages, and the rising prices that inevitably follow, could affect millions.

Crisis planning is needed now to blunt the possibility of continuing shortages fueling further disruption to many countries already feeling intense inflationary pressure.

As the world’s leader in food production, the United States also must lead the development of a plan to ensure that markets continue to work efficiently. If world demand for grain and oilseed supplies continues to race ahead of supply, which is the current trend, a concise plan could help calm markets as well as anxious trading partners.

In USDA's World Agricultural Supply and Demand Estimate report issued this week, 2010/2011 ending corn stocks are projected to be 675 million bushels, resulting in a stocks to use ratio that matches the lowest of the last 15 years.

The USDA report predicts global 2010/2011 corn production to be 1.8 million tons lower than in the previous WASDE report. That's due to crop reductions in Argentina and Mexico. What’s more, beginning corn stocks for the 2011/2012 marketing year may be the tightest on record, which sets off more warning lights.

Let’s not wait until a full-fledged crisis is upon us before addressing the situation. No one is asking for financial assistance-- just a realistic plan on how we will contend with shortages in several key commodities. With the world population expected to grow from the current 6.8 billion to 9 billion by 2050, it is a dynamic that will be with us for years to come.

Weather always adds yet another risk to the volatile crop markets. The current La Niña is strong, right up there with the top 4 of the past 100 years, according to Elwynn Taylor, Iowa State University meteorologist.  Its effect on the U.S. summer crop-growing season is difficult to predict. Some are warning of drier than normal growing conditions, even possibly drought in some areas.

The potential of increased grain demand from China also could be a game-changer as the world’s most populous country seeks to increase imports to help ease the nation’s rapidly rising food inflation.

With commodity prices surging higher and uncertainty growing each day, a workable global contingency plan must be formulated that has the ability to preserve order in the face of increasing shortages.

The three biggest users of corn-- the livestock industry, ethanol industry and the export market-- along with world trading partners should examine growing supply concerns together. These major players could develop workable solutions to maintain orderly markets as demand will likely continue to run ahead of supply.

Ignoring the flashing warning lights by not having a workable contingency plan in place makes the risk of worldwide shortages in corn, soybeans and wheat intolerable.