“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
Many a tear has to fallBut it’s all, in the game“It’s All In the Game” – Music by Charles DawesAs far as we know, only one American vice president ever made a contribution to public life worth remembering. That was Charles Dawes, vice president under Calvin Coolidge.Mr. Dawes was a Chicago banker who was also […]
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.
Taken individually, most people perform relatively well in their daily lives. They get up, drive to work and interact with various other people, largely without incident. But when big groups of people get together, they can be incredibly pig-headed, demanding "action" when the best course of action would simply be inaction. And before you know it, chaos ensues. Bill Bonner explains...
America's most precious resource isn't oil, natural gas, gold or any other commodity. But it travels through an extensive pipeline that, if severed, could signal an unprecedented breach in U.S. security. What is this pipeline, and why is it so imperative that the U.S. take steps to protect it? Byron King explains...
The S&P 500 just clocked a new closing high last week, while the Dow and the Nasdaq both fell just short or their previous highs. But under the surface, you'll find a few bits of evidence pointing toward lower prices. And right now, there are seeing several warning signs that could point to market weakness. Greg Guenthner explains...
US unemployment rates are some of the most dubious and debatable numbers in economics. And when you look at how the government fudges them it's easy to see why. Today Jim Mosquera attempts to make sense of them, and includes an insightful commentary on another controversial topic: minimum wage. Read on...
Over the years, the feds have made it increasingly difficult for you to maintain any semblance of financial freedom. So today, Addison Wiggin details one strategy that will go a long way to keeping them at bay, and allow you to keep more of your hard-earned money in the process. Read on...