Food shortages & riots

[Libertine]

How bout all this talk lately about food shortages and food riots.

The Wall Street Journal says to start stockpiling food now -

R.O.I. - WSJ.com

Load Up the Pantry
April 21, 2008 6:47 p.m.

I don't want to alarm anybody, but maybe it's time for Americans to start stockpiling food.

No, this is not a drill.

You've seen the TV footage of food riots in parts of the developing world. Yes, they're a long way away from the U.S. But most foodstuffs operate in a global market. When the cost of wheat soars in Asia, it will do the same here.

Reality: Food prices are already rising here much faster than the returns you are likely to get from keeping your money in a bank or money-market fund. And there are very good reasons to believe prices on the shelves are about to start rising a lot faster.

"Load up the pantry," says Manu Daftary, one of Wall Street's top investors and the manager of the Quaker Strategic Growth mutual fund. "I think prices are going higher. People are too complacent. They think it isn't going to happen here. But I don't know how the food companies can absorb higher costs." (Full disclosure: I am an investor in Quaker Strategic)

Stocking up on food may not replace your long-term investments, but it may make a sensible home for some of your shorter-term cash. Do the math. If you keep your standby cash in a money-market fund you'll be lucky to get a 2.5% interest rate. Even the best one-year certificate of deposit you can find is only going to pay you about 4.1%, according to Bankrate.com. And those yields are before tax.

Meanwhile the most recent government data shows food inflation for the average American household is now running at 4.5% a year.

And some prices are rising even more quickly. The latest data show cereal prices rising by more than 8% a year. Both flour and rice are up more than 13%. Milk, cheese, bananas and even peanut butter: They're all up by more than 10%. Eggs have rocketed up 30% in a year. Ground beef prices are up 4.8% and chicken by 5.4%.

These are trends that have been in place for some time.

And if you are hoping they will pass, here's the bad news: They may actually accelerate.

The reason? The prices of many underlying raw materials have risen much more quickly still. Wheat prices, for example, have roughly tripled in the past three years.

Sooner or later, the food companies are going to have to pass those costs on. Kraft saw its raw material costs soar by about $1.25 billion last year, squeezing profit margins. The company recently warned that higher prices are here to stay. Last month the chief executive of General Mills, Kendall Powell, made a similar point.

The main reason for rising prices, of course, is the surge in demand from China and India. Hundreds of millions of people are joining the middle class each year, and that means they want to eat more and better food.

A secondary reason has been the growing demand for ethanol as a fuel additive. That's soaking up some of the corn supply.

You can't easily stock up on perishables like eggs or milk. But other products will keep. Among them: Dried pasta, rice, cereals, and cans of everything from tuna fish to fruit and vegetables. The kicker: You should also save money by buying them in bulk.

If this seems a stretch, ponder this: The emerging bull market in agricultural products is following in the footsteps of oil. A few years ago, many Americans hoped $2 gas was a temporary spike. Now it's the rosy memory of a bygone age.

The good news is that it's easier to store Cap'n Crunch or cans of Starkist in your home than it is to store lots of gasoline. Safer, too.

Another...

Two major US retailers ration rice amid global food crisis

Two major US retailers ration rice amid global food crisis
Apr 24 03:10 PM US/Eastern

Two major US bulk retailers are rationing the sale of large bags of rice to consumers amid a growing global food crisis marked by skyrocketing prices and heavy pressure on demand.

Sam's Club, a chain owned by retail giant Wal-Mart, announced Wednesday it was placing a limit of four 20-pound (nine-kilogram) bags per person for imported jasmine, basmati and long grain white rices as a "precautionary step."

"This temporary cap is intended to ensure there is plenty of rice for all our members," said Sam's Club, which has 600 stores across the United States, adding that the measure did not apply to smaller bags of rice.

The move follows similar steps taken by its main rival, Costco, which has also limited the sale of rice in its stores.

Both companies insist that they have plenty of rice but say the steps were necessary to ensure there was enough for all of their clients.

The measure appears aimed at preventing over-stocking among customers concerned by the surging prices of commodities worldwide.

Small restaurants and businesses fill their freezers and pantries with products from big-box retailers such as Sam's Club and Costco.

"There is no rice shortage in the US," said David Coia, a spokesman for the industry's USA Rice Federation.

"What happened is because of perception of problems in the world market, a few people try to buy more rice than they usually do, and these two companies have decided they want all their customers to be able to purchase rice."

"What happened was one person bought a three-month supply instead of a two-week supply that they normally buy," Coia told AFP.

He predicted that pressure on the price of rice would ease by the end of next year, noting that more and more fields are being used to grow rice.

US rice production provides 88 percent of the domestic consumption while imports from countries such as Thailand and Vietnam make up the rest.

The rationing steps came as the price of rice has surged worldwide due to the rising costs of energy and fertilizers, droughts in some rice producing countries and higher demand.

Some countries have taken drastic steps such as limiting or suspending rice exports to ensure they meet domestic demand.

The price of certain types of rice rose by 50 percent in recent months, causing tension in the poorest parts of the world.

The high price of rice sparked violent protests in Haiti earlier this month, forcing the government to issue an order to lower prices. In the Philippines, the army distributed rice in impoverished neighborhoods to prevent tension.

The World Bank warned this month that the higher food prices could push 100 million people in poorer developing countries further into poverty.

I saw a report last night showing a customer that said a 20 pound bag of rice was $12 a week ago. and now its $24.

As silly and crazy as it all sounds, it shouldnt be ignored.. We've had it too good for too long here in America..(actually its a world wide crisis) and were not used to something like this..so its more like a shock or disbelief... most of us just ignore it and say to ourselves : "that cant happen here...this is America". Sometimes we just need to think outside the box.

And as bad as we think the prices are at the super markets here now...think how all the poor countries are handling things. Theres food riots already in places like Haiti and Indonesia where they could barely afford to buy anything as is even before this crisis. This is sure to spread as long as gas and food prices keep spiking world wide.

Oh , And another reason why the world hates us...we've been contributing alot to this shortage -

Consumption by the United States: Americans constitute 5% of the world's population but consume 24% of the world's energy.

Americans constitute 5% of the world's population but consume 24% of the world's energy.

On average, one American consumes as much energy as

2 Japanese
6 Mexicans
13 Chinese
31 Indians
128 Bangladeshis
307 Tanzanians
370 Ethiopians

Americans eat 815 billion calories of food each day - that's roughly 200 billion more than needed - enough to feed 80 million people.

Americans throw out 200,000 tons of edible food daily.

The average American generates 52 tons of garbage by age 75.

[LiKuidLinsang]

I'm not sure what to think of this, other than...

RAMEN!!!

Joking aside, this has probably been lying in waiting for a while. It's now beginning to take a distinct form here in the U.S. because major parts of the world are growing quickly, both demographically and economically. People are throwing aside some inferior goods so that they can enjoy better food (although, when it comes down to it, why you would choose quality over quantity is beyond me, unless it's extremely healthy).

EDIT: I missed that little tidbit on U.S. consumption rates when I was posting this. Those are some crazy statistics. =)

[BoyEngland]

I never thought I would see the day when Americans are killing each other outside Wal-Mart over a bag of rice.

Next you will see them carrying pales of water on their heads for 30 miles and we will get those third-world style appeals on TV.

We are having some strikes next week which will cause petrol shortages. Can't wait to see that!

[Libertine]

Originally Posted by LiKuidLinsang

It's now beginning to take a distinct form here in the U.S. because major parts of the world are growing quickly, both demographically and economically.

Indeed. Mostly India and China. Its their middle class in those 2 countries that have been soaring recently. Which means their able to afford alot more and eat the way we do. (Thats what happens when our big companies give their jobs to other countries)

And thats just part of the problem. Then you have all the poor countries switching over from corn to rice. Since corn has been way too expensive since they've set aside 1/3 of the supply for ethanol. So now demand for rice goes sky high. I heard in Japan they had a butter shortage. No butter in any of the food stores. ( I believe they get their butter from the U.S. )

This crisis could sky rocket pretty quickly. Think for yourself. Dont listen to any government source out there thats downplaying this and saying its nothing to worry about. They dont want people to panic and strip the food stores bare. Heck, our monkey of a president still doesnt think our country is in a recession. The last thing he would want to admit to is a failed economy after a failed Iraq.

[intellect +4]

lets not forget that the shortages in grain/corn/agriculture affects meat prices as well. Cows, chickens, pigs, hot dogs, feed on the stuff and if it costs more to feed livestock, the prices will be handed down the the consumer. We might be seeing the dollar menu being replaced by $2 dollar menu at McDonalds soon

[Go Pre]

Food shortages? On planet Earth? That is one of the more ridiculous things I've heard in a while. There is too much God damned food on this planet. On the list of resources we should worry about, it is right there above crayons.

[Jimdalf]

Originally Posted by intellect +4

chickens, pigs, hot dogs, feed on the stuff

We've got us our very own Homer Simpson.

Given the general economic slowdown and the increased risk of investing in many goods and services, I think that wall street is moving to the old reliables such as food, water etc. that we will always need. These stocks cannot fall very far but cannot often rise much, so by spreading a little bit of fear and panic, causing us to stockpile food and so buying more in the short term, these stocks will increase in value right now, helping out wall street for the time being. Basically, I don't trust these people.

To blame China and India is ridiculous, growth in consumption has been monitored over the years and they have known for a long time that this is approaching- these people forecast everything in order to try to guarantee profits. To tell us now that there is a global shortage is probably not the truth... I daresay they have simply overestimated their predicted profits and need to make up the gap, or they will lose their bonus.

Food is a "futures" trading market anyway, I'm not certain what that means but I think it means it takes a while for price increases to reach the consumer.

This is all cynical speculation but I don't like to take advice from the people who will probably benefit from my subsequent actions.

P.S I don't have to pay for my grub. Huzzah!

[Libertine]

Food shortages? On planet Earth? That is one of the more ridiculous things I've heard in a while. There is too much God damned food on this planet. On the list of resources we should worry about, it is right there above crayons.

Going to the stores now it would be a joke to think theres a shortage. The shelves are stocked and everything looks fine and dandy. Except if you start looking at the price tags. Last time I went , it seemed like EVERYTHING was more expensive. And I mean everything. Dont be fooled by how stocked the markets are. They could easily be wiped out in a day shall there be a crisis.

Originally Posted by Jimdalf

We've got us our very own Homer Simpson.
To blame China and India is ridiculous, growth in consumption has been monitored over the years and they have known for a long time that this is approaching- these people forecast everything in order to try to guarantee profits. To tell us now that there is a global shortage is probably not the truth... I daresay they have simply overestimated their predicted profits and need to make up the gap, or they will lose their bonus.

Food is a "futures" trading market anyway, I'm not certain what that means but I think it means it takes a while for price increases to reach the consumer.

I agree and disagree with you here. The way they explained the India / China middle class thing is that its been an Explosion of growth in the middle class. Food issues are hard to calculate when there are booms like this. Notice 10 years ago when you needed tech support with any computer issue , you'd usually get U.S. tech support. Now that is very hard to get. I usually get tech support from India 90% of the time...Regardless of which product or manufacturer it is. It seems everything telephone wise went to India. No disrespect to them, but they almost always never know anything about my product..But thats another issue.

I do agree with you on the Market issues. The Market is so wild these days.. The way their dumping money out of stocks and into anothers. But alot of it is speculation. (more like panic speculation) The SAME reason our gas prices are so high. These guys at the stock exchange are partially to blame for all this. And their also to blame for the high corn / rice prices. Its good for them because thats how they make their money...by buying all this stock...which increases the stock price...and then selling.. But they've gone overboard and the prices should NOT be where their at now. Its almost like a pack mentality there where lets say a year ago they all get together and discuss buying massive amounts of stock in corn and rice to get the price where its at now. Now they can Sell and they'd be rich. Their trick worked....and we, the consumers end up looking like the fools again.

The only ones loving these high gas prices are the folks at the stock exchange & the big oil companies. Lower and middle class get screwed as usual..

[sublime8022]

And it's sad to think I threw out my dinner tonight a full plate of rice and pork chops. I kinda wasn't hungry so I just threw it out.

And lib I worked at a grocery store for 3 years and for 1 year I was a manager (night manager) Not paid a lot but after 3 years of working there I watched prices almost double maybe triple. When I started a gallon of milk was 2.74$ now it's 4.30$. Nesquik was 69 cents now it's 1.69$. Cheese and deli products also went very high.

[Libertine]

Originally Posted by sublime8022

And it's sad to think I threw out my dinner tonight a full plate of rice and pork chops. I kinda wasn't hungry so I just threw it out.

And lib I worked at a grocery store for 3 years and for 1 year I was a manager (night manager) Not paid a lot but after 3 years of working there I watched prices almost double maybe triple. When I started a gallon of milk was 2.74$ now it's 4.30$. Nesquik was 69 cents now it's 1.69$. Cheese and deli products also went very high.

All this while Wall Street is having a blast -

Wall Street mood swing: Gloom gives way to (premature?) optimism - International Herald Tribune

Stocks rise and Dow crosses 13,000 as dollar advances: Financial News - Yahoo! Finance