Greetings, everyone! As I was surfing the net today, wondering why Earth Day and all the other made-up “holidays” couldn’t be held together on a single day, just to get them all out of the way, I saw this story that wholesale food prices have jumped in March by the largest percentage since January 1984.
That story reminded me of another article I remember reading a couple of years ago– the last time food prices rose significantly. Perhaps not coincidentally, this was also the last time gas prices reached the $3.00 to $4.00 range, as economists predict will happen this summer.
Thanks to the never-forgetting function of the internet (which is why I will never be elected to public office, btw), I found the article at the Wall Street Journal, entitled “Load Up the Pantry”. We all know there are some persons who store food for basic emergency preparation. The Mormons are famous for having a goal that every family have a year’s worth of food stored up for whenever the end of the world comes around. I’m not sure, though, whether this food will be transported to whatever planet they inherit, and whether it will then feed their wives and spirit babies.
The gist of the WSJ story concerns the possibility of storing food as a smart investment. The cost of food has been increasing at a higher rate than the return a bank gives on savings accounts, money markets or CDs. It’s that simple, really.
But everybody needs food. And if the price of food continues to jump, it may be a simple and smart investment. And so I reprint some excerpts from the full article for your consideration:
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.
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.
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.