Addison Wiggin

“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:

Big Gulp
Now with 9% less!

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 Wiggin
for The Daily Reckoning

You May Also Like:


The Milkman Indicator

Chris Mayer

Our family has a milkman. Yes, a milkman, just like in the old days. He comes every Friday and drops off a crate full of cold bottles of milk, along with tubs of yogurt and butter, cheeses and sometimes meats. You place your orders online, and the milkman brings it your doorstep, fresh from a […]

Addison Wiggin

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.

  • KAMRAN

    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.

  • baskerbill

    The problem of raising the food prices will be worst for the developing economies and for the third world rather than for Americans.

  • Pingback: www.gtavcc.com()

  • Pingback: Trackback()

  • Pingback: Trackback()

Recent Articles

My Boots Don’t Believe In This “Bubble” Talk

Matt Insley

A debate’s been raging inside DR HQ. Is the shale revolution sustainable or was it just another credit bubble destined for an ugly bust? Our shorthand for the tussle is Bubble vs. Boots. In the “boots on the ground” corner, stands Matt Insley. Today, he says he’s setting the record straight on America’s oil and gas industry. Read on to see why he thinks all shale bubble talk is fear mongering…


An Indicator from An Advisor to Oil Trading’s “God”

Jody Chudley

Last week, our own Jody Chudley came across what the called "by far the most bullish chart for 2015 oil prices since the bottom fell out of the market". Interestingly, the chart came from one of the more credible voices in the business, Steven Kopits of Princeton Energy Advisors. Read on for the details...


The Irony of a Debt-Fueled Oil Boom

Wolf Richter

A report out of research firm Wood Mackenzie today estimated that U.S. oil and gas producers would have to cut spending by $170 billion to maintain net debt at 2014 levels. That won’t stop them from drilling for more and more oil, however. Wolf Richter explains the irony of the situation, below...