"Food prices will rise 3-4% in 2008, predicted the U.S. Department of Agriculture’s chief economist Joseph Glauber yesterday. Should his prediction come true, that would spell a whopping 8% inflation rate for food since January 2007.
"While the ethanol boom can be expected to bring higher incomes to farmers and reduce government outlays for farm programs," Glauber suggested at the USDA annual outlook conference, “it will also contribute to higher crop and livestock prices… Overall retail food prices for 2008-2010 are expected to rise faster than the general inflation rate."
"There's going to be real food inflation in this country," added C. Larry Pope, CEO of Smithfield Foods. "I think we need to tell the American consumer that things are going up. We're seeing cost increases that we've never seen in our business."
Chris Mayer, one of my investment guru guys, wrote:
"Grain consumption is at record levels, as I’ve written to you before. We’ll need record harvests to stop draining the world’s declining inventories. And as that margin grows thinner, we risk having actual shortages. So far, we’ve seen large prices for many grains. But what we could see beyond spikes in price are actual shortages.
"Yesterday, the CEO of Nestle gave a similar bleak outlook on finding scarce food-related commodities. Peter Brabeck said that the food industry would have to fight the biofuel industry over access to arable land. “We will not find sufficient water to produce all the crops… there will be a fierce fight for arable land.”
"Another telling move is what’s happening to import duties. Normally, import duties on food protect homegrown producers from outside competition and make the local consumers foot the bill. But governments around the world are suddenly slashing tariffs and import duties on wheat, rice and cooking oil."
You can believe these guys, or not. As I figure it, I'm up 10% on the value of my three-month non-perishable food pantry stash (about half of which we've eaten). In fact, it's saved me so many trips to the store, I think with the added cost of gas and time, I'm up over 15% in three months--that's a better return than the S&P 500 or the Dow has returned so far this decade, especially when priced in gold:
What do you do after your pantry is packed? Try growing your own.
2 comments:
Very good pointers and the gas angle just adds to it.
Another thing you can do is put spare money into those things that are going up but you have to be careful. DBA is an etf that you buy like a stock and it covers wheat,corn, sugar and soy. If you have an IRA pension account you can buy within the account like a stock. It has a nice chart upward but has pulled back in the last 3 days. But I still have it. Yet the novice needs to know that hedge funds are in DBA also and when they pull out in mass it can cause your upward profits to fall. See whether in your ira, you can put a trailing stop loss of say 2% or some put 6%.
So if your money went up 8 percent in two months and you wanted to protect most of that from the hedge funds pulling out, you would do that with a trailing % based stop loss which would sell your position by computer even if you were not watching it the day the hedgies pulled out.
Honey,
This one may be of interest.
http://www.jerrypournelle.com/science/voodoo.html#Voodoo1
Dean
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