Something Feral

Digging up the flower-beds.

Friday, November 28, 2008

Food for thought, but not much else

It appears that "tightening our belts" may take a more literal meaning:
Food prices will rise next year, prompting a revival of protectionism from food-growing nations and risking a renewed bout of rioting, according to Jochen Hitzfeld, an analyst at UniCredit SpA in Munich.

“Agricultural commodities will outperform the broad commodity indices in 2009,” Hitzfeld wrote in a research note this week. “If key crop-producing countries then impose export bans again and speculators drive up prices via physical stockpiling and futures contracts, new food unrest is even conceivable in the second half of 2009.”

While it might seem a bit absurd to think that the production of food may become a problem in the coming years, a quick look at some of the contributing factors indicates that the absurd may have a firm foundation in reality:
Retail prices for flour, potatoes, cheddar cheese and apples showed the largest increases in the quarter. A 5-pound bag of flour cost $2.62, up 37% from a year earlier, while 5 pounds of potatoes rose 32% to $3.38. Prices for cheddar cheese and apples surged 21%.

Vegetable oil rose 17%, a dozen eggs jumped 13%, pork chops were up 6.8% and hamburger cost 5% more, the federation said.

Corn futures surged 70% on the Chicago Board of Trade during the quarter from a year earlier, wheat increased 11% and live cattle rose 8.2%.

Food-price inflation may run as high as 6% this year, the highest since 1980, the U.S. Department of Agriculture said.

Coupled with rising inflation across the board*, while a single food crisis alone would not be enough to cause a serious panic domestically, a number of mutually-magnifying crises affecting the food-market might be enough to cause more serious problems both domestically and abroad.

It has been observed that the difference between civilization and barbarism is a week without food; I pray we don't get to test the hypothesis.

* An inevitable step, in my opinion; with skyrocketing national debt, the only available option to a government that evidently has no intention of paying honestly is to monetize it, causing massive, nay, titanic inflation.


Elusive Wapiti said...

Feral, it looks to me that this isn't a food scarcity issue as it is a monetary issue (primarily) and a distribution one.

We're busy inflating the snot out of our currency with all this bailout nonsense. That'll push up prices across the board right there. It'll get worse if we head into hyperinflation like what happened in Germany after the War, or in Argentina in the 70s.

And a lot of this price hikes, according to the articles you cited, are from transportation/distribution costs.

Something Feral said...

I absolutely agree that it's a distribution problem, not capability-of-production problem. America produces an extraordinary amount of food, but the network that moves localized/specialized goods across the continent is susceptible to disruption.

Grocery stores aren't designed to hold a lot of inventory in reserve; when they're out, there's usually a truck en-route to resupply. This strategy works while everything is skittles and beer, but when the excrement hits the fan, a grocery-store could get cleaned out in a matter of hours. (This was the case with some goods up here when we had a week-long power-outage over most of town.) In reality, it's just an artificial shortage, but with enough disruption and adequate food preservation, it can become a real shortage, with no definite means of determining when or where the chain-of-supply is re-established.

Inflation will cause disruption in the long-term, but I wouldn't underestimate the ability of los Federales to amplify any ripples of discontent in the short-term. Long story short: everyone should be stocking the pantry with dry-goods, canned-goods, and other culinary staples.

El Borak said...

Luckily for us (maybe?) is the fact that we still spend most of our food dollar on processing and packaging. If Americans bought corn instead of packages of pre-mixed cornbread, our food bills would be a lot lower.

I suspect suburban culinary schools might just do a whopping business over the next decade. Gotta put all those grandmothers back to work somehow, I guess.

Something Feral said...

The additional cost of packaging hadn't crossed my mind; you make an excellent point. The amount of packaging on a lot of main-line goods is ridiculous (as is the bagging at the store, but that's another thread).

Culinary schools might see a bump, but I expect more "domestic diva" shows on Food Network. Not that like watching much beyond "Good Eats", but I'd tune in to watch one of those pretty-pretty princesses suit up and butcher a hog.

That'll be the day. Until then, I'll be working on my heirloom garden.