“Food inflation will become America’s top crisis,” in 2011 reads one of the top 10 forecasts issued by the National Inflation Association (NIA) this morning.
“Americans can cut back on energy use,” the NIA surmises, “by moving into a smaller home and carpooling to work. They can cut back on entertainment, travel and other discretionary spending.
“However, Americans can never stop spending money on food.
“The days of cheap food in America are coming to an end,” the forecast continues. “The recent unprecedented rise that we have seen in agricultural commodity prices is showing no signs of letting up.”
Indeed. You’ve already seen sugar futures at a new 30-year high. Coffee futures reached a new 13-year high last week. Orange juice, corn, soybeans and palm oil have all stretched to near three-year highs in the past week or so.
Last month, global food prices surpassed their mid-2008 records, according to a report out this morning from the United Nations Food and Agriculture Organization (FAO).
The FAO’s food price index clocked in at 214.7 in December – up 4.2% in just a month, and breaking the previous record of 213.5 in June 2008.
“It will be foolish to assume this is the peak,” says FAO senior economist Abdolreza Abbassian. He calls the situation “alarming,” but dutiful bureaucrat that he is, he won’t call it a “crisis.”
Heck, even the Super Big Gulp ain’t what it used to be:
7-Eleven has surreptitiously shrunk its famous beverage container from 44 ounces to 40. Seems people started noticing it last summer…but only this week did the lid get blown off (so to speak) with a column in the Austin American-Statesman.
An alert reader compared the Super Big Gulp with a true 44-ounce container from a competitor…and it came up four ounces short. 7-Eleven confirmed it did make the change. But pressed for an explanation, a hapless PR flack could merely say, “We don’t have announcements; we just have information, so I’m not sure if we ran an announcement or not.”
“This is called short sizing,” says Resource Trader Alert editor Alan Knuckman, who has almost single-handedly propped up 7-Eleven’s Big Gulp business in recent years. “And it could have come from two different commodity-related angles…
“First, maybe because corn prices have rallied so much in the past 12 months, this is indicative of a rise in the price of corn syrup.
“Or second, maybe – since the cost of the cup is worth more than the soda inside – this was an energy saving technique in the face of higher energy prices. Either way, they’re clearly shrinking the size of a beverage to increase margins.
“But!” Alan continues. “This may not be the only place we’ll see a change. If 7-Eleven is REALLY watching their commodity prices closely, they’ll soon realize that the price of coffee has nearly doubled since last year.
“The best way to make this whole short sizing debacle a nonissue” according to Alan, “is to simply profit from the same forces that are shrinking our servings. In 2011, as always, it will all come back to commodities!”
Addison Wigginfor The Daily Reckoning
Stocks are plunging again today as we go to press. The Dow Jones Industrial Average is down a whopping 500 points – back below 11,000…AGAIN. Meanwhile, most European markets are off more than 5%.In other news, a small biotech company, Medicinal Genomics, announced today that it has successfully mapped the DNA of marijuana. Also, President […]
Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He's the creator and editorial director of Agora Financial's daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar, and Why it's Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.
cannot help thinking about an empire that’s losing its grip on exploding other ones.
hey may be good for obesity problem in this country that has its own chain of other issues.
The problem of raising the food prices will be worst for the developing economies and for the third world rather than for Americans.
Despite rapidly rising food prices, American households still spend relatively little on groceries. And while plenty of factors contribute to lower food costs in the US, that can lead to serious competition... and that means a good investment opportunity is right around the corner. Dave Gonigam explores...
Wouldn't it be convenient to know how fragile or how prone to cracking up the stock market... bond market... and housing market are? Well, Chris Mayer recently created a new index that does just that. And it's signaling that a sharp drop in asset prices is a high possibility. Read on...
Since its introduction more than nine years ago, bitcoin has gone from fledgling digital currency to complete phenomenon. And while it still has its detractors, there's good reason to believe that bitcoin could very well be the "currency of the future" its proponents claim it is. And Google just agreed with them. Luke McGrath explains...
Capitalism has become a dirty word in America. But that's only because the current form of capitalism being practiced in the U.S. is a corrupt version of what the Founding Fathers had in mind... It's now something wholly unrecognizable and far more dangerous than what any of them had in mind. Richard Ebeling explains...
"Buy land," the old saying goes, "they're not making it anymore." Of course, there's more to it than that. But if you look closely at some of the disturbing trends in US farmland, you'll find that this could be some of the best investment advice you get all year. Addison Wiggin has the full story...
From heightened political pressure on Russia to the conflict between Israel and Palestine, it seems world events in the last week have really spooked the markets. But even before that, there was something else that was worrying investors... earnings. Today, Greg Guenthner explains how this will play out...