Friday, February 19, 2021

Food inflation: a growing threat to us all

 

As part of my ongoing series of articles about inflation, I'd like to consider food this morning.  It's getting harder to find for many nations, although individual First World consumers probably aren't aware of the problem;  and even in our own supermarkets, it's getting a lot more expensive.

Let's begin with worldwide food availability.  Bloomberg reports:


Global food prices reached a six-year high in December and are likely to keep rising into 2021, adding to pressure on household budgets while hunger surges around the world.

A United Nations gauge of food prices has jumped 18% since May, as adverse weather, government measures to safeguard supplies and robust demand helped fuel rallies across agricultural commodities from grains to palm oil. Prices will likely climb further, the UN’s Food & Agriculture Organization said.

The spike threatens to push up broader inflation, making it harder for central banks to provide more stimulus to shore up economies, while stirring memories of food-price crises a decade ago. It’s bad news for consumers whose incomes have been hurt by the Covid-19 crisis, and adds to concerns about global food security that’s being affected by conflicts and weather shocks.

That’s especially true for the poorest countries having to contend with limited social safety nets and purchasing power, according to the FAO.


There's more at the link.

It's important to understand how international trade in food is affected by the dramatic decrease in currency values, pressure from competing exports and non-food production, and labor and other shortages produced by the COVID-19 pandemic.  A great deal of America's food is grown outside our borders - fruit from South America, avocados from Mexico, some types of grain from other countries.  Because we pay high prices for it and provide a profitable market, those supplying it are less willing to grow staple foods for the benefit of their own population.  Indeed, they're likely to take over as much arable land as they can for their "cash crop", leaving relatively little for subsistence agriculture.  This can be a death blow to poorer communities, who can't afford "cash crops" at the best of times, and must grow what they need to survive.

Quite literally, when the First World pays well to buy fancy foodstuffs, it's reducing the supply of more basic foodstuffs that the Third World needs to survive.  It's a simple equation.  As a result, some nations are beginning to restrict the amount of food they export, in order to ensure that their own population has enough food to survive.  They'll forgo the cash income from crops in demand in the First World, in return for more basic foodstuffs that their people can eat (and enough farmland to devote to the latter as well).

On the other hand, the prices we're seeing on US supermarket shelves are reflecting the growing international imbalance in food production (and probably making it worse).  They also show the consequences of the COVID-19 pandemic for our economy.


In the United States, the local farmers, it seems, are being squeezed out of business, or paid not to grow food, while Big Agriculture is more concerned with exporting its supplies than keeping domestic food stocks safe and affordable.

In an effort to fight two wars at the same time – against a pandemic as well as purported climate change – the Biden administration risks putting the United States on a crash course with food shortages and soaring prices as early as this year.

. . .

One of those presidential actions envisions the conservation of 30 percent of the nation’s lands and waters over the next decade. Where will all of that protected land come from? Perhaps from Bill Gates, who now owns the deed to most of the farmland in the nation? Doubtful.

The answer is from small, independent farmers, whose agricultural activities, the Democrats say, are responsible for 10 percent of the manmade greenhouse emissions purportedly frying up the planet.

While occupying the previously unknown ‘Office of the President-Elect’, the Democratic leader said he would pay U.S. farmers to “put their land in conservation” and live without their ‘cash crops.’ How much the tillers of the soil will receive has not been disclosed, nor if this program will be enforced upon farmers against their will.

Another reason that the future does not bode well for American farming is that Biden’s nominee for Agricultural Secretary is none other than Tom Vilsack, who also served as the USDA chief in the Obama administration. Biden said Vilsack will help American agriculture become “the first in the world to achieve net-zero [greenhouse] emissions.”

But is anyone considering what will happen if or when America achieves net-zero food production at a time when the rest of the world is hoarding limited supplies? Equally concerning will be the quality of the food being produced.

. . .

The question demands repeating: if the United States understands that it is dealing with a potentially critical situation with regards to food security in the middle of a pandemic, why does it continue to export at breakneck speed? While the major agricultural powerhouses, like Argentina, Brazil, Ukraine, Russia and China are taking steps to protect their domestic food supplies, keeping prices in check, the U.S. seems to be bucking the trend.

Perhaps the closest thing to a siren warning of danger came from a recent report by Bloomberg that carried the headline, ‘China Is So Thirsty for Soy That America Could Soon Be Importing.’ The question, however, that the article never dares to ask is: ‘importing from where?’

“China’s appetite for U.S. soy is draining silos to the point that American processors may need to import the most beans in years this summer,” the article began. “The boom in U.S. shipments to China comes after Brazil and other countries effectively ran out of exportable supplies – prospects traders in North America are now facing.”

Christian Westbrook, the host of Ice Age Farmer who has been warning about a potential “engineered famine” for some time, summed up the situation as “game over.”

“That’s why, to see the Biden administration roll forward these terrible executive orders, it’s insane,” Westbrook commented. “Other countries are frantically taking steps…to protect their domestic food supplies, keep prices low and be able to feed their animals, and then, in turn, be able to feed their people. Not here.”


Again, more at the link.

I've been keeping a careful eye on our supermarket purchases over the past few years.  Ever since we got into the twenty-teens, I've noted that food prices rose by plus-or-minus 10% every year.  Now, it's getting worse.  I won't be surprised to see our food costing 20-25% more in December than it did a month ago.  Just looking at the contents of our typical shopping cart is an eye-opener.  At Sams Club, paying discounted big-box store prices, it's easy to spend $200-$300 on meat and groceries that don't even half-fill the cart.  (Needless to say, we don't do that often!)  Contrast that with a decade ago, where for the same price we could fill almost two carts.

I've mentioned in the past two accurate resources to figure out the real rate of inflation;  Shadowstats and the Chapwood Index.  Both are far more accurate than the "politically correct" fudged figures provided by the Bureau for Economic Statistics.  I urge you to click over to each of them, read more about their methods, and begin to use them to track real inflation nation-wide, even as you track your own expenditure in your local market.  I think you'll be unpleasantly surprised.

Peter


13 comments:

FredLewers said...

Had anybody looked at the UN 'food prices' lately?
http://www.fao.org/worldfoodsituation/foodpricesindex/en/
During the arab spring years ago I discovered the food index. Allegedly, if the index went over a certain point civil unrest was close behind. Looking at them now, they look lower than they were in the past. I wonder if they doctor stats like the federal government does???

Eric Wilner said...

I'm not sure where the squeeze is in the beef supply chain, but from where we're sitting it appears that even as beef prices are rising and supply is tight, the local cattle farmers are finding the business unprofitable.
Seems a bit odd, no? Prices are unusually high on the demand side, but low on the supply side?
Maybe it's an issue with meat-packing plants, but it's been going on for months now.
(The impact on us, apart from paying more for beef when it's available, is that I had to do the fall mowing of the hayfield myself, with inadequate equipment; neither the guy who normally harvests it nor the neighbors with the cattle wanted free-for-the-harvesting hay this time, when normally they need lots of hay for the winter. We shall see what spring brings.)

tweell said...

My parents told me of the 1930's and farmers ordered to throw away food while millions went hungry. These times may be on us once more. The difference is that folks had large gardens then and grew as much of their own food as they could. That's not the case today. My little raised plot with onions and the tomato plants I have in pots inside aren't going to make much difference in a house with 5 adults.
Looks like the USA is going to be going on a diet - Venezuela style.

Steve S said...

I find his humor dark, but Malthus always gets the last laugh. Hopefully we'll avoid him.

BillB said...

The current Administration may be looking to Stalin's solution in Ukraine, the Holodomor, where millions of Ukrainians died from government forced starvation. I wouldn't put it past the Administration from coming into Conservative States and stealing their food to feed the East and Left Coasts big cities.

Eric Wilner said...

BillB: I noticed a few weeks ago that some idiot on the 'Net was advocating cutting off food supplies to the countryside. My assumption at the time was that he actually thought that where food came from was grocery stores in cities.
But, then... yeah, Holodomor.
And with AOC and company pushing for the Great Leap Backward, expect efforts to starve farmers.

Inventive said...

Take steps now, grow your own food or build a solid rapport with some local farmers and ranchers. Smartly scaled grass fed beef operations are resilient to grain prices(local anecdotes, YMMV). CAFO beef is going to get hit hard with increased grain prices.

We didn't have enough dairy to sell at the time, but we had some dedicated egg customers last year... despite the food shortages in "peak Corona" we were still supplying eggs to our regular customers.

Either way, the average American hasn't had to worry about getting cheap food in 100 years, but that appears to be ending... We need to get ready for it now.

Sam L. said...

Democrats hate Americans...who are not Democrats.

Beans said...

Don't forget, the fees and regulations that government put upon our agricultural system that were reduced or removed by President Trump's administration have come roaring back under Biden's. That and the increase in fuel prices already, combined with bad harvests last year and now really bad outlooks on meat animals this year and just domestically you're looking at bad times.

Go watch some of the farmer video channels, like 'Cole the Cornstar' and such. It's very enlightening.

Equipment costs are up. Fuel costs are up. Last year's super wind storm destroyed a lot of farm infrastructure like silos, bents, and such. And in some places huge amounts of stored grain were destroyed.

Add all of that to a very unfriendly environment for taxes and increased fuel costs, pandering to the ChiComs, the fact that the Paris Accords attack US farming directly and the Covidiocracy having screwed up the supply chain, the move by many states to a $15.00/hr wage...

It's almost like the Government is trying to destroy US agriculture.

It's not Big Ag. No. It's the Government.

The way the Government is moving, we'll all be forced out of the cities to go hand-work farms like what the Khymer Rouge did in Cambodia. That's what the Green New Deal promises.

And with the destruction of the middle class, a vast increase in the lower class and really poor, debt peonage and latifundia farms are just on the horizon. What? You don't expect 'prison farms' to be expanded by the huge numbers of new felons and inmates?

Jimmy the Saint said...

Well, it's not like you filthy peasants are going to starve yourselves, are you?

- Your Friendly Global Elites

Jimmy the Saint said...

@tweell: "My parents told me of the 1930's and farmers ordered to throw away food while millions went hungry."

Lies. All lies. There were never any hungry people in the 1930s, and especially not in the Ukraine.
- Walter Duranty

Aesop said...

Waitwaitwait...you're suggesting that somehow, socialism leads to food shortages...?!?

Who knew?!?!?






Stock up on canned goods every payday.
Including the ones in OD cans, if you can find or make any.
Neither goes bad for quite a good while.

john simple said...

Reasons like this, I don't understand why more people aren't getting into Permaculture. The more self-reliant you are, the more free. Food inflation is a way to weaken the population. Permaculture and co-ops (not Whole Foods, I mean, real co-ops) aren't only for tree huggers like me.