I love those old book titles that are a whole page long.
It's not just the bacon. The price of everything we eat is going to go up. Commodity prices are going up: corn, wheat, sugar, coffee, cocoa, meat and animal products.
Surprise! Food companies are passing along those increases to consumers. The list is long and includes some sources of "cheap food" that people have started to see as their last resort when there is only $10 left in the bank account and payday isn't for another three days. I'm not saying we should blame these companies and boycott their products, it's not just them, after .80all, that are raising prices. And companies can only absorb so much before you start to wonder about the sanity of their executives. Furthermore, do you remember a couple of years ago when everyone was all up in arms about how companies were sneakily reducing the size of products. Well, it seems like they're being more up-front this time.
Sidebar: Did you know that from 1921 until 1968 a Hershey's bar cost 5 cents? The price didn't fluctuate, but the size did. By 1968 the bar was so small at 3/4 of an ounce, that Hershey finally decided to raise the price to 10 cents. That held for five years. Since about 1982 the bar has stayed relatively the same size but the price has fluctuated, mostly going up.
So what is to blame? Why are food prices rising at a faster rate than inflation overall? It's kind of a perfect storm. Some of these things may get better, thereby easing commodities prices, but some are probably only going to get worse.
A Bad Year for Russian Wheat: On average, Russia is the third largest producer of wheat in the world. They, along with the US, EU, Canada, Brazil, Australia, the Ukraine and Kazakhstan account for 90% of the world's wheat exports. Earlier this year, Russian officials banned wheat exports due to a drought. Russia not only can't sell wheat internationally, they didn't produce enough to meet their own needs. On this announcement, wheat futures at the Chicago Board of Trade rose as fast as they are allowed. Obviously, not every year will be a bad one for wheat. But will food companies be as quick to pass along savings to consumers as they are to pass along price increases? When looking to blame for anything, the Russians are a good place to start.
We Want That, Too: There are lots of emerging markets out there creating lots of demand for the lots of things we enjoy on a regular basis. Meat is good. But, let's face it, Americans are over-consumers and more and more people in places like China and India are stepping up to that buffet. Meat is already expensive, in more ways than one. Did you know it takes 35 calories of fossil fuel to produce one calorie of meat? And since my village won't allow me to raise a cow in my backyard, my choice is just to use less meat in the meals I cook. I mean, c'mon village, it's not like we're even a town! Villages and cows should go together. I can, however, raise chickens. We're planning where to put our coop. Note: the Chinese take second place in blame-laying. It's like I'm Tom Clancy in the 1980s over here.
And Speaking of Fossil Fuels: Corn, palm oil, soybeans, sugar, and many more products are being diverted into bio-fuel. That simply means less space to grow food and higher food costs. Right now African farmers are switching from cocoa to palm oil due to its demand as a bio-fuel. Hence the rising costs of chocolate. I'm going to figure out how to travel by fireplace and portal like in Harry Potter. That will solve many, many problems.
Quantitative Easing?:
Why food bills are heading higher
Russian Wheat-Export Ban Sends Futures Prices Higher
Will Chocolate Become The New Caviar?
Expect higher food prices to take a bite out of your budget
Food Sellers Grit Teeth, Raise Prices
Food Timeline
The World's Wheat Supply
