food cost

Normally every other week on Tuesday you get a short article when I go to cash my paycheck. This time I decided that my love for my loyal minions was so great, pure and noble that you deserved a regular length article. So I wrote it last night. Damn, I'm so good I make my own nipples hard.

FOOD COST
Unless you’ve been blind the last year or two you can’t help but have noticed the steadily increasing cost of food. We had a few scares such as wheat and corn doubling, rice unavailable at twice the price. There were the Mexican Tortilla Riots. California produce doubles and triples. More produce coming from other countries, even as oil goes up in cost. The problem is that there isn’t just one thing causing these problems. If that was the case the problem could either go away or be fixed. But we’ve hit the perfect storm. Inflation, as the federales see no other way of paying the bills ( a large part which used to bride the AARP and Pentagon but must now also include the bankers ). Drought. Exhausted soil. Peak Oil. Credit contraction. Ethanol.
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Inflation causes the Arabs to increase the cost of oil, even as a glut of inventory is seen globally. They also raise the cost as they start seeing production declines, in hopes of disguising it. California’s drought is going on three years. Australia and China and Argentina are seeing drought. Exhausted soil is global. As is urbanization of farmland. Peak Oil is a dead horse I’ve beat beyond what is proper or desired in this blog ( don’t think I’ll stop though ). We won’t run out of oil. Future cavemen will still be using seeps for torches. But we’ve already run out of cheap and abundant oil, which 99% of our economy and empire are run on. A country that was not on the downside of energy production wouldn’t be using 30% of its corn crop for fuel. And our new friend that most likely won’t go away, credit contraction. The banks are using the last of their reserves and all of the bail out funds to pay bonuses and stay in business a few more quarters. They won’t waste those reserves on making loans. How will the quest for more oil be funded? Short answer, it won’t, because there hasn’t been a major discovery of easy oil in forty years. All the discoveries that get everyone’s nipples rock hard are expensive to extract both in dollars and in energy to run.
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Another factor causing some food increases are steel prices. Obviously, when canned food doubled in price it was because of the metal ( as pointed out by Rawles a month or so prior to it‘s occurrence ) since the food inside hadn’t increased. Another steel related factor is oil rigs. There is a global shortage of the rigs, some speculate from Saudi Arabia using a lot more to try to extract from other fields to keep up production. And of course, farm equipment might be effected, but I’m not sure to what degree. One would think it’s negligible. I imagine bankruptcies and lack of credit play a bigger role on the equipment side. Although it would be interesting to get a better big picture on steel. It seems like it might be a future elephant in the china shop. I’m not trying to give extra weight to the shortage in steel. It is a minor factor right now. I don’t think much oil would come on line even without the rig problem. But it does underline in what direction a rescue won’t come from ( significant increase in oil ).
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I haven’t even covered the recent Nigerian oil field attacks, the potential of the new wheat rust to invade here or other major producers, the likelihood of even more ethanol use or other factors. True, rice just took a downturn in price. Small quantity purchases are down about a third right now, a good time to stock up. But I wouldn’t count on that to last. In just a few years the overall consumer cost has doubled, and that is just at the beginning of all these problems. It behooves you to overstock on your stockpile. Get more than you imagine you need. Start with the basic grain and legume stock and only then start adding the more expensive, desirable foods. This is the equivalent of buying all the ammo primers you will ever need before the last election. And it will not even help much in future food needs. You must stock up for shortages now, because there is a strong possibility they will occur. Future daily food needs are going to come at the expense of your other budgeted items.
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I don’t discourage gardening or farming. That is a good strategy for inflation and spot shortages ( and for more healthy eating ). I only oppose it as a talisman. It is a great help, but it won’t solve all your problems nor is it without hidden costs. That is what I preach against, thinking it is the be all and end all. You also need to factor in its dangers. Such as a magnet for theft and confiscation. Yes, your stockpile is also a danger that way, but it is also easier to hide and will insure against weather problems and crop failures. You will also need to keep shopping at the market and evolve your buying around inflation and shortages. Your stockpile should always be to avoid starvation, not used day to day ( until after a collapse ). You don’t use your ten year old, $6 a bag wheat to eat with now or the immediate future. You go buy a $15 bag and use that ( obviously factoring in rotation, it is the amount of emergency only food you keep constant ).
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You should be looking to cut back on all other areas of your budget, because almost everything else can be trimmed or eliminated. But not food. Perhaps you can eliminate your produce bill, but the bulk of your calories will probably still come from the grocery store. Few of us can afford the amount of land needed to grow all of our food. And paying a mortgage on that land is not viable long term, with the economy such as it is. For the majority of us. There will always be exceptions. You can move to a cheaper dwelling. You can cut back on gasoline. Eliminate the car, if you are lucky. Cut back on luxuries. There are a lot of ways to trim the budget. But for most of us, that is going to be so you can spend more money on food. Historically, food was always the majority of a budget, before the Green Revolution ( oil for food ). Expect it to be once again. Not all of us can be farmers, even in an agricultural economy. And the barriers to entry are prohibitive. In today’s economy, the small scale farmer is penalized and is fighting an entrenched monopoly. Not for gardening, but for farming. Producing all your own food. You are forced to live in a fiat currency economy and must work for a paycheck rather than dinner.
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Use this window of opportunity to insure yourself with food now. And expect prices to get far more insane than they are now. Do what you can to produce your own, but realize you are fighting a losing battle and your pain will increase. Acting now on all fronts ( stocking, growing, reducing your budget to afford the increases ) will minimize your suffering and increase your choices. It still won’t be pretty, or fun, but perhaps not as bad as it could be.
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