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Thread: we haven't yet begun to see the extent of rising food prices ...

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    Default we haven't yet begun to see the extent of rising food prices ...

    from

    (snip)"Get that checkbook ready: It's going to cost you more to raise the 2011 corn and soybean crops than it did this year, according to a recent report.

    The 2011 Purdue Crop Cost & Return Guide, released Tuesday by Purdue University crop specialists and ag economists, indicates variable costs -- including fertilizer, seed, pesticides, fuel and machinery -- could see "double-digit increases" next year, reflecting higher grain market prices in recent months.

    "For rotational corn, which is most of the corn in Indiana, our estimates show variable costs in 2011 up around 13% compared with 2010," says Bruce Erickson, Purdue director of cropping systems management. "Soybean production costs will be up around 6%, and for winter wheat we're estimating that costs will be 13% higher. If you grow continuous corn, you can expect to spend about 14% more next year." (snip)

    (snip)"Erickson says fertilizer has seen the biggest price increases, especially for ammonia, diammonium phosphate and potash. "An April U.S. Department of Agriculture survey of Illinois retail fertilizer prices -- a benchmark for Indiana -- reported average per-ton costs of ammonia at $520, diammonium phosphate at $503 and potash at $501," according to a Purdue report. "This month those prices are $736, $661 and $526, respectively."

    How accurate are these numbers? Fairly close to reality, farmers say, at least compared to early input purchases for next year's crop. "The specific numbers are pretty close to what I've pre-paid," says Agriculture.com Farm Business Talk member BA Deere"

    And, the increases are not just limited to typical crop inputs; Farm Business Talk member Kay/NC says bumps in electricity rates will add to the cost burden on farms like hers.

    "The generating utility companies are asking for rate increases, and passing that along to the REA cooperatives when they purchase power," Kay/NC says. "This is a big burden on us in hogs, especially in the cooling season, and it has to add to the guys running crop drying fans in the fall."

    So, what can you do to hedge against these rising costs? Farm Business Talk member jrsiajdranch says he'll look at alternatives for crop nutrients, where costs are seeing the highest price increases.

    "I decided that fertilizer is going to be slashed to the bone this year: Half rate of commercial N on corn-on-corn acres and no commercial N on old alfalfa acres," he says. "Also going back to doing my own spraying this next year to cut costs. All in all, I think fuel may actually be the biggest concern."(snip)


    What is this telling us ? Probably that the prices of corn, soybean and other foodstuff futures contracts will quickly rise while at the same time crop yields will incrementally decline. Probably that the costs of processed food products on supermarket shelves will rise sharply next year as the food processors are forced to pass on their rising costs of raw materials and energy.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    Wait until the hotter climate takes over. Then you will see changes you'd never expect in food and most everything else.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Banned Eric Stoner's Avatar
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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    We told you so ; we told you so. Gold and oil aren't the only commodities that keep going up in price.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    With agri-business aggressive treatment of soil and reliance on single crop cultures, troubles can be expected by that entity alone.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    as if additional evidence was needed ...

    (snip)"Great Atlantic & Pacific Tea Co., the once-dominant grocery-store chain founded in 1859, may file for bankruptcy in the coming days to restructure debt, two people with knowledge of the matter said.

    The shares fell $1.90, or 67 percent, to 93 cents at 1:24 p.m. in New York Stock Exchange trading, the biggest drop in at least three decades, before trading was halted pending news.

    A filing to reorganize under court protection may come as soon as this weekend, said the people, who declined to be identified because the matter is private. A&P hired law firm Kirkland & Ellis LLP to represent it in negotiations with creditors and in any Chapter 11 proceeding, the people said.

    Lauren La Bruno, an A&P spokeswoman, didn’t return an e- mail and a call seeking comment.

    The Montvale, New Jersey-based grocer has struggled to cope with mounting competition from discounters such as Target Corp. and Wal-Mart Stores Inc., which are offering more fresh food to attract customers. A&P, which operated almost 16,000 stores in the 1930s, now runs about 400 locations under its namesake banner as well as SuperFresh and Food Emporium. In 2007, it bought the Pathmark Stores supermarket chain for $678 million.

    A&P has lagged behind rivals on fresh food and presentation, said Jim Hertel, a managing partner at Willard Bishop Consulting, a Barrington, Illinois-based firm which advises retailers and suppliers. A&P also has been hamstrung by a heavily unionized workforce, he said.

    Less Flexibility

    A&P’s labor costs mean the company has less flexibility to invest in other parts of the store, Hertel said today in a telephone interview."(snip)

    from


    While part of A&P's 'insufficient profit margin' problem is due to the higher wages of its unionized labor force, other parts of A&P's 'insufficient profit margin' are due to an inability to pass on retail food price increases to customers in an environment where wholesale food price increases are unavoidable. Part of the article mentions a 7.1% decline in sales volume during the most recent quarter, which is implied to be the direct result of cash strapped retail grocery shoppers switching to WalMart and Target in order to save a few bucks by buying imported fresh vegetables, imported canned goods etc.

    ~
    Last edited by Melonie; 12-10-2010 at 03:15 PM.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    Inflation in China presently is mostly driven by food price inflation. Numerous causes worldwide, I'd guess. But as the world becomes "flatter" (Thomas Friedman's wording), food prices will rise except in farming countries wher production/distribution finally becomes efficient.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    Numerous causes worldwide
    Indeed there are numerous causes ... but prominent among them is a diversion of a significant amount of agricultural acreage away from human edible food crops and instead towards biofuel crops. This is a significant factor in the USA, and an even larger factor in western europe.


    food prices will rise except in farming countries where production/distribution finally becomes efficient
    Arguably the US isn't on that farming countries list, given that selective energy taxes affecting everything from diesel fuel to fertilizer / pesticides, rising property taxes, new tracking regulations for agricultural products, selective gov't subsidies for particular crops vs others, the US minimum wage etc. all significantly contribute to an 'inefficient' US ag market.

    The 'gold foil hat' crowd would tell you that global food prices are rising because, in large part, the world's supply versus demand situation re agricultural commodities leaves no choice but for food importing countries to include US food exports in their purchases ... which in turn increases the global marginal food price to a level where the increased US agricultural input costs above can be 'covered' by the marginal price paid. However, this high level of marginal food pricing also results in windfall profits for truly 'efficient' food producing countries from Brazil to Vietnam.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    Quote Originally Posted by threlayer View Post
    Inflation in China presently is mostly driven by food price inflation. Numerous causes worldwide, I'd guess. But as the world becomes "flatter" (Thomas Friedman's wording), food prices will rise except in farming countries wher production/distribution finally becomes efficient.
    Have you seen a movie called The Future of Food. It talks about how government farm subsidies for genetically modified seeds has ruined subsistence farming all over the world.

    http://www.youtube.com/watch?v=vi1FTCzDSck
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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    ^^^ I'm familiar with Vandana Shiva. But ultimately I have to refer back to a famous old adage of 'you can't have your cake and eat it too' ( pun intended ).

    The central point of her argument is that the 'highly efficient, highly productive' attributes of advanced hybrid / genetically engineered crop seeds are more or less totally dependent on the use of matching 'selective' pesticides to achieve that productivity - and that those 'selective' pesticides have a devastating effect on 'natural' / 'heirloom' seed / plant varieties.

    Yes this means that the use of advanced hybrid / genetically engineered crop seeds with 'selective' pesticides negatively affects the ability of subsistence farmers to achieve reasonable productivity from planting 'natural' / 'heirloom' seed / plant varieties. In essence, this also means that once a country adopts corporate farming using enhanced seed / plant varieties that it is no longer possible for subsistence farming to competitively exist side by side with it. But on the other hand, in the absence of corporate farming using enhanced seed, the best productivity levels available with subsistence farming using 'natural' / 'heirloom' seed varieties will fall vastly short of satisfying demand for food given present levels of human population.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    Another cause is the the huge losses in the Ukranian grain crops after last summers fires. The hadr winter wheat won't be ready until march. The seed crop to replant this came from the USA.


    We have no grain reserves. We sold them. We sold them to keep the status quo as it is. When food riots began in Mexico and elsewhere because of the Biofuels fiasco, the strategic reserve was released.

    The silos are empty.

    This years crops. We can eat it, we can burn it in cars, or we can store. You can only pick two.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    ^^^ actually we can only pick ONE, since the gov't mandate to burn 10% ethanol in cars will still be in place, along with the quota against imports of foreign ethanol. Additionally, non-corporate farm productivity will be down in the USA and throughout the world given the fact that the associated fertilizer, pesticide and ag diesel prices are all up significantly ... while the creditworthiness of family farmers is down. And of course this assumes that the US family farm owner doesn't die next year ... at which point his family will have no choice but to sell the farm to a corporation in order to raise cash to cover the cost of the Estate Tax !

    Indeed the world is likely to see a replay of the Mexican food riots this year in a host of countries, as the lack of stored grain or newly harvested surplus grain for export by both the US and Russia leaves the world market supply on the short end of the stick. Wheat futures are already starting to price this in i.e. december 2011 wheat at 833 versus december 2010 wheat at 726 and historical december 2009 wheat at 650 or so.

    ~
    Last edited by Melonie; 12-13-2010 at 04:39 AM.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    and speak of the devil ...

    (snip)According to money manager Shawn Hackett, founder and president of Hackett Financial Advisors, a firm with a specific focus on agricultural commodities, Colombia normally produces approximately 12 million bags of coffee a year. However, as the weather has severely affected 494,200 acres of farmland, Hackett tells Minyanville that it’s “very, very clear we are going to see another failed Colombian coffee crop.”

    “Colombia and the surrounding region has had the worst rainfall in more than three decades -- they even had to shut down the Panama Canal, which was only the third time that’s happened in history,” Hackett says. “Generally, rains are good for coffee -- at the right time of year. They’re terrible, though, when they occur close to harvest time -- which is right around now. You can’t pick wet beans, all that water creates fungus problems, and, as a lot of growers dry their beans outdoors, well, that’s obviously not possible during torrential downpours.”

    Colombia’s coffee crop was off by 32% last year, to just under eight million bags, the smallest crop since 1976. Because of this, as well as a lackluster crop of nine million bags in 2008, Hackett says the “market desperately needs this coffee.”

    “Everyone was expecting a recovery back to the 10-12 million area, but it now looks like it will come in somewhere in the seven to nine million range,” he says.

    This will stimulate a “huge rush into the futures market, as everyone tries to buy whatever coffee is remaining,” Hackett says. “Problem is, there are only about 1.5 million bags left. As we get into January, we’ll start to see the cash differential start to take off, as the cash price begins to rise against the New York futures price. And this will be the straw that breaks the camel’s back.”

    Coffee is now at $2.10 a bag, which Hackett points out is twice the $1.05 at which it was trading in 2008. And he sees it reaching $4 a bag by June.

    “$4 is a price that will really be a killer for the roasters,” he says. “A move that far up will really create a tremendous financial strain.”

    This will affect not only names such as Starbucks (SBUX), Green Mountain Coffee Roasters (GMCR), Peet’s Coffee & Tea (PEET), Caribou Coffee Company (CBOU), and Farmer Brothers (FARM), but importers, exporters, shippers, and commodities trading houses.

    “None of them have factored $4 coffee into their models,” Hackett says. “They’ve been buying cheap coffee for 20, 30 years, and never figured on this.”

    He likens it to the recent rise in cotton prices, which also caught everyone by surprise “because no one’s ever seen $1.50 cotton before.”

    “No one thought it could happen,” he says. “No one planned for it. The same thing is happening with coffee. The market is going to do to the coffee companies what cotton prices are currently doing to clothing manufacturers. There’s only so much lower-quality Robusta the coffee companies can mix into their blends, and they’ve already maxed that out. Any more, it won’t have the right flavor. A company like Hanes (HBI) can turn to synthetic fibers if they need to. Green Mountain can’t.”

    Hackett recommends staying out of names like Green Mountain and Starbucks, or getting short."(snip)

    from

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    Quote Originally Posted by loren View Post
    Have you seen a movie called The Future of Food. It talks about how government farm subsidies for genetically modified seeds has ruined subsistence farming all over the world.

    http://www.youtube.com/watch?v=vi1FTCzDSck
    Just recently I saw the PBS documentary, "Dirt: the Movie." Shiva was on that too.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    The latest numbers for the PPI - UP 1.1% in December. Now the "core' rate is supposedly only 0.2 % because it excludes food and energy. Those two are excluded because they are too "volatile". So if you don't eat, drive or heat your home, everything is peachy keen.

    MOOSE MUFFINS !

    Show me an industry that is not seriously affected by energy costs.
    Supermarkets and other food retailers are not affected by rising food costs ?
    What about restaurants and other dining establishments ?
    If folks have to spend more on food and fuel, don't they have LESS to buy clothing, appliances etc. ?

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    yup !!! Of course there is a different viewpoint between US mainstream news sources like CNBC ...'

    (snip)"As last year drew to a close, food and energy costs were rising relentlessly at the wholesale level despite a tame underlying inflation trend, complicating the outlook for monetary policy.

    U.S. producer prices climbed 1.1 percent in December after a 0.8 percent rise in November, according to another Labor Department report. Economists had been looking for a repeat of that 0.8 percent advance in December.

    Inflation excluding food and energy, however, rose just 0.2 percent, in line with forecasts. That left the year-on-year gain in core producer prices at 1.3 percent, just below analyst estimates.

    Among the biggest gainers were home heating oil, which jumped 12.3 percent, and fresh and dry vegetables, which surged 22.8 percent. Fresh fruits and melons rose sharply for a second straight month, posting a 15.4 percent gain.

    A recent spike in global food costs has raised fears of a crisis the poorer corners of the developing world."(snip)


    ... and foreign news sources like

    (snip)"AP ALGIERS, Algeria – Riots over rising food prices and chronic unemployment spiraled out from Algeria's capital on Thursday, with youths torching government buildings and shouting "Bring us Sugar!"

    Police helicopters circled over Algiers, and stores closed early. Security officers blocked off streets in the tense working-class neighborhood of Bab el-Oued, near the capital's ancient Casbah, and areas outside the city were swept up in the rampages.

    The U.S. Embassy issued a warning to Americans in Algeria to "remain vigilant" and avoid crowds."(snip)

    or ...

    (snip)"CNEWS SINGAPORE - Record high food prices are moving to the top of policymaker agendas, driven by fears it could stoke inflation, protectionism and unrest and dent consumer demand in key emerging economies.

    The United Nations' food agency (FAO) said on Wednesday that food prices hit a record high last month, above 2008 levels when riots broke out in countries as far afield as Egypt, Cameroon and Haiti.

    In Asia, official data and analyst estimates both pointed to inflationary pressures. Chilli prices have increased fivefold in Indonesia in the last year and the country's president called for households to plant food in their own gardens.

    President Susilo Yudhoyono Bambang told a cabinet meeting people should be "creative""in planting, with Trade Minister Mari Pangestu leading the way in planting at home.

    "I have 200 chilli plants in flowerpots," Pangestu told a briefing on Thursday. "The agriculture ministry is informing farmers how to take care of the plant and also encouraging consumers to plant chilli in their own yards."

    Surging food prices have often provoked unrest in urban areas of poor countries, where food makes up a high proportion of household purchases.

    Analysts say African and Caribbean economies dependent on food exports could be particularly hard hit, helping stoke unrest and potentially pushing governments towards imposing export bans and expropriating foreign-owned farmland."(snip)


    Bottom line is that rapidly increasing food and energy prices represent an arguably 'cruel' new 'tax' on the working poor - whose percentage of income spent on food, fuel and gasoline is the highest.

    Ironically, thanks to generous US social welfare benefit programs, the 'non-working' US poor escape many of the effects of this 'tax' - thanks to increasing food stamp benefits, thanks to low income heating bill assistance, and of course thanks to their ability to avoid having to buy gasoline to drive to work on a daily basis. Obviously, the 'non-working poor' throughout most of the world do not share in similar levels of 'gov't generosity'.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    and I'll avoid saying 'I told you so', but if anybody else had acted on our original December 6th - 13th discussion ...



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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    Another "I told you so " from today's N.Y. Times. Both the U.S. soybean and corn harvests for 2011 will be well below expectations. A complicating factor is the continuing diversion of a large part of the corn crop to ethanol production. Bottom line is if you liked the increase in food prices we saw in 2010, you'll LOVE the increases this year.
    Last edited by Eric Stoner; 01-13-2011 at 12:14 PM.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    ^^^ yup again. I just saw a stat indicating that the 'new' US ethanol fuel mandate ( 10% mix with gasoline ), in combination with import quotas still barring an increase in ( lower cost ) ethanol imports from Brazil and other foreign countries, will in fact consume 40% of this year's US corn crop as US ethanol refinery feedstock !! Thus the resulting reduced US corn supply stemming from a poor US corn harvest will completely fall on the 'corn as food' side of the equation.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    ^^^ while the above news may be a bit scary on a theoretical level, somebody better start paying attention to the real world news in regard to what can happen when gov'ts can no longer placate the unemployable masses facing rapidly rising food and energy prices ...




    (snip)"Tunisian Prime Minister Mohamed Ghannouchi has taken over the country's interim presidency amid reports President Zine al-Abidine Ben Ali has left Tunisia in the wake of deadly protests against his 23-year rule. By Carla WESTERHEIDE (video)
    FRANCE 24 (text) Tunisian President Zine al-Abedine Ben Ali left office on Friday amid continuing anti-government unrest in the North African country.(snip)

    (snip)According to al Jazeera TV, Ben Ali, who came to the presidency in 1987, has left the country. But his whereabouts remain unknown.

    Earlier in the day, the authorities had declared a state of emergency in a violent face-off between protesters and police that has been spiralling out of control since mid-December, resulting in dozens of deaths.(snip)

    (snip)A curfew which only covered Tunis has been spread to the rest of the country and expanded to cover a 14-hour period beginning at 5:00 pm, Tunisia time. A statement from a news state agency also indicated that limits would be placed on how many people could gather at once in public, and gave police and military officers the authority to fire at any suspect.

    Early Friday, thousands had gathered along one of the city’s main streets in response to a call for a general strike organised by Tunisia’s only legal trade union.

    “Riot police who had surrounded the protesters on both sides of Bourguiba Avenue [one of the capital city’s main streets] hurled tear gas when people started climbing the walls of the Interior Ministry”, Cyril Vanier, FRANCE 24’s special envoy in Tunis, said. He added that the area resembled a “battlefield”.

    Hundreds of demonstrators also took to the streets outside the capital, in places like Sidi Bouzid and Gafsa, where anti-authority slogans such as “Ben Ali, get out” could be heard.

    Meanwhile, at least 12 more people were said to have been killed in clashes with police in Tunis and the surrounding suburbs late Thursday, according to medical sources. Prior to those reports, the International Federation for Human Rights had put the death toll since the beginning of the riots in mid-December at 66.(snip)

    (snip)""A month ago, we didn't believe this uprising was possible," said Beya Mannai, a geology professor at the University of Tunis. "But the people rose up."

    The new unrest came just a day after Ben Ali tried to quell the uproar by going on television to promise lower food prices and new freedoms for Tunisians."(snip)

    from


    Not wanting to raise undue alarm, but it's arguable that the only major difference between Tunis and America in this regard is that America has so far been able to continue sending out extended unemployment benefit checks, welfare checks, food stamp SNAP cards, utility bill assistance checks etc. At some point, and by some means ( problems raising the federal debt ceiling, problems with states becoming unable to float new muni bonds etc. immediately come to mind ), it may indeed be possible that America can no longer afford to continue 'paying people not to riot'.

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    interesting take from Burning Platform ...

    (snip)When bipartisanship breaks out in Washington DC, check to make sure your wallet is still in your pocket. Every time you fill up your car this winter you are participating in the biggest taxpayer swindle in history. Forcing consumers to use domestically produced ethanol is one of the single biggest boondoggles ever committed by the corrupt brainless twits in Washington DC. Ethanol prices have soared 30% in the last year as the supplies of corn have plunged. Only a policy created in Washington DC could drive up the prices of gasoline and food, with the added benefits of costing the American taxpayer billions in tax subsidies and killing people in 3rd world countries.



    The grand lame duck Congress tax compromise extended a 45-cent incentive to ethanol refiners for each gallon of the fuel blended with gasoline and renewed a 54-cent tariff on Brazilian imports. The extension of these subsidies, besides costing American taxpayers $6 billion per year, has the added benefit of driving up food costs across the globe, causing food riots in Tunisia, and resulting in the starving of poor peasants throughout the world. This taxpayer boondoggle is a real feather in the cap of that fiscally conservative curmudgeon Senator Charley Grassley. He was joined in this noble effort by another fiscal conservative, presidential hopeful John Thune. It seems these guys hate wasteful spending, except when it benefits their states. The bipartisanship in this effort was truly touching, as Democrats Kent Conrad and Tom Harkin also brought home the pork for their states.

    A bipartisan group of 15 senators signed a letter in late November demanding an extension of U.S. ethanol subsidies. I wonder if the fact they have received hundreds of thousands of dollars in campaign contributions during the past six years from pro-ethanol companies and interest groups like ADM, Monsanto, the National Corn Growers Association, and the Iowa Renewable Fuels Association had anything to do with this demand. You can always count on a Senator to do what’s best for his re-election campaign rather than what is best for the country. These symbols of political integrity will always spout the standard talking points:
    •Promoting ethanol reduces our dependence on foreign oil
    •Ethanol is green renewable energy
    •Ethanol is cheaper than gasoline
    As we all know when dealing with a politician, “half the truth, is often a great lie.”

    Amaizing
    Corn is the most widely produced feed grain in the United States, accounting for more than 90% of total U.S. feed grain production. 81.4 million acres of land are utilized to grow corn, with the majority of the crop grown in the Midwest. Although most of the crop is used to feed livestock, corn is also processed into food and industrial products including starch, sweeteners, corn oil, beverage and industrial alcohol, yogurt, latex paint, cosmetics, and last but not least, fuel Ethanol. Of the 10,000 items in your average grocery store, at least 2,500 items use corn in some form during the production or processing. The United States is the major player in the world corn market providing more than 50% of the world’s corn supply. In excess of 20% of our corn crop had been exported to other countries, but the government ethanol mandates have reduced the amount that is available to export.



    This year, the US will harvest approximately 12.5 billion bushels of corn. More than 42% will be used to feed livestock in the US, another 40% will be used to produce government mandated ethanol fuel, 2% will be used for food products, and 16% is exported to other countries. Ending stocks are down 963 million bushels from last year. The stocks-to-use ratio is projected at 5.5%, the lowest since 1995/96 when it dropped to 5.0%. As you can see in the chart below, poor developing countries are most dependent on imports of corn from the US. Food as a percentage of income for peasants in developing countries in Africa and Southeast Asia exceeds 50%. When the price of corn rises 75% in one year, poor people starve.

    The combination of an asinine ethanol policy and the loosest monetary policy in the history of mankind are combining to kill poor people across the globe. I wonder if Blankfein, Bernanke, and Grassley chuckle about this at their weekly cocktail parties while drinking Macallan scotch whiskey and snacking on mini beef wellington hors d’oeuvres. The Tunisians aren’t chuckling as food riots have brought down the government. This month, the U.N. Food and Agricultural Organization (FAO) reported that its food price index jumped 32% in the second half of 2010 — surpassing the previous record, set in the early summer of 2008, when deadly clashes over food broke out around the world, from Haiti to Somalia.(snip)

    (snip)"Real Cost For A Gallon Of Corn Ethanol

    Corn Ethanol Futures Market quote for January 2011 Delivery $2.46
    Add cost of transporting, storing and blending corn ethanol $0.28
    Added cost of making gasoline that can be blended with corn ethanol $0.09
    Add cost of subsidies paid to blender $0.45
    Total Direct Costs per Gallon $3.28

    Added cost from waste $0.40
    Added cost from damage to infrastructure and user’s engine $0.06
    Total Indirect Costs per Gallon $0.46

    Added cost of lost energy $1.27
    Added cost of food (American family of four) $1.79
    Total Social Costs $3.06

    Total Cost of Corn Ethanol @ 85% Blend $6.80 (snip)

    (snip)The true cost of the ethanol boondoggle is hidden from the public. The mandates, subsidies and tariffs take place out of plain view. The reason blenders (and gas stations) will pay the same for ethanol is because they can sell it at the same price as gasoline to consumers. A consumer will pay the same for ten gallons of E10 as for ten gallons of gasoline even though the E10 contains a gallon of ethanol. Consumers pay the same for the gallon of ethanol for three reasons. (1) They don’t know there’s ethanol in their gasoline. (2) There is often ethanol in all the gasoline because of state requirements, so they have no choice. (3) They never know the ethanol has only 67% the energy of gasoline and gets them only 67% as far. The result is that drivers always pay much more for ethanol energy than for gasoline energy, simply because they pay the same amount per gallon. When gasoline prices are $3.00 per gallon, Joe Six-pack pays $4.50 for the same amount of ethanol energy.

    You know a politician, government bureaucrat or central banker is lying when they open their mouths. Whenever evaluating a policy or plan put forth by those in control, always seek out who will benefit and who will suffer. Who benefits from corn based ethanol mandates and subsidies? The beneficiaries are huge corporations like Archer Daniels Midland and Monsanto, along with corporate farming operations (80% of all US farm production), and Big Oil. The mandated ethanol levels are set in law. By providing tax subsidies we are bribing oil companies with taxpayer dollars to do something they are legally required to do, resulting in a $6 billion windfall profit to oil companies. The other beneficiaries are the Senators and Representatives from the farming states who are bankrolled by the corporate ethanol beneficiaries and their constituents who will re-elect them. The environment does not benefit, as many studies have concluded that it requires more fossil fuel energy (oil & coal) to produce a gallon of ethanol than the energy created. The jobs created in the farm belt at artificially profitable ethanol plants are more than offset by job losses due to the added costs in the rest of the economy. When subsidies are removed or oil prices drop, the ethanol plant jobs disappear, resulting in a massive capital mal-investment.

    Our supposedly wise PhD and MBA leaders have created a perfect storm. The unintended consequences of government intervention in the markets are causing havoc, food riots, starvation and intense suffering for the poor and middle class. Brazil produces sugar cane ethanol in vast quantities and can export it to the U.S. much cheaper than we can produce corn ethanol. Fuel prices would be lower without tariffs on Brazilian ethanol imports. The average cost of food as a percentage of disposable income for an American is 10%. Averages obscure the truth that the cost is probably .0001% for Lloyd Blankfein, Ben Bernanke and Chuck Grassley, while it is 30% for a poor family in Harlem. America’s horribly misguided ethanol policy combined with Ben Bernanke’s Wall Street banker subsidy program are resulting in soaring fuel and food prices across the globe. Poor people around the world suffer greatly from these policies (snip)

    from

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    Default Re: we haven't yet begun to see the extent of rising food prices ...

    if course, there is another gov't 'answer' to rapidly rising food prices ...

    from

    (snip)Russia has just announced it would proceed with price caps on a variety of foodstuffs, from buckwheat, to potatoes, assorted fruits and vegetables and all other commodities it deems "socially important" accoding to Russian newspaper gazeta.ru. And so the big margin crunch goes up several orders of magnitude, as companies, desperate to pass through surging input costs, but prohibited from raising selling prices, are forced to eliminate any and all overhead, most certainly including such trivialities as labor, in order to stay in business. More importantly, experts now predict that full year inflation in Russia will hit double digits. Just in the first 17 days of January, inflation hit 1.4%, or 9% annualized (according to gazeta... our calculation indicates a notably higher number but readers get the idea). Luckily, Russia does realize just how futile this task of price controls is: "as soon as we introduce price controls, once a deficit, the product disappears from the market, followed by an even higher rise in prices on the shadow, not covered by official supervision, market." And so a vicious circle in which high prices beget even higher prices begins. But don't worry - this could never happen in the US: see Americans only eat gold and their iPods.(snip)


    (snip)From Gazeta.ru, google translated:

    Government has the right to limit the price for a period not exceeding 90 days. It's allowed to do in the event that within one month increase in retail prices for these products is 30% or more in one or more regions.

    Relevant amendments have been adopted into law on trafficking in the past year, but authorities have never exercised their right. Although, for example, buckwheat because of the drought has risen over the past year 3 times. " It was inappropriate to "impose price caps on buckwheat in the autumn, when the harvest had not yet been finalized, said the official. " In addition, it was expected that the situation with buckwheat will be more favorable in view of admission of the Siberian harvest. But manufacturers and trade recorded a high level of prices, since many farms lost to the drought, the fall harvest - and wanted to compensate, where possible, "- noted the deputy minister.

    A marked increase in the prices of foodstuffs began in the second half of last year, and to stop it have not yet succeeded. " the risk of significant price increases this spring and the grain - and, hence, the bread and meat for the group behind him, "- admitted Klepac.

    As a result, inflation is once again at risk to go beyond the framework outlined by the Government. In 2010 it was 8,8% in the original forecast of 6-7%.

    Inflation forecast for 2011 - 7%. But in January it can perform almost a third of the annual plan. According to the Ministry of Economic Development, which sounded at the end of last week, the head of department Nabiullina, consumer price inflation for the first month is 2,1-2,3%. According to the Federal State Statistics Service, from 1 to 17 January, inflation reached 1.4% ( in annual terms - 9%).

    The Central Bank is also concerned about the acceleration of inflation. " I feel that in the first quarter we will see an acceleration of inflation. Perhaps the situation will change in the second quarter, I hope so "- said the first deputy chairman of the Central Bank Alexey Ulyukayev, speaking at a conference at Deutsche Bank in London on 21 January.

    By mid-year inflation could reach double digits on an annualized basis, said Ulyukaev.

    Double-digit inflation for the year - it's real, I agree the head of department of strategic analysis FBK Igor Nikolaev. " Our forecast for 2011 - 9% "- said the head of the Center for Macroeconomic Research of BDO in Russia Elena Matrosov. " My prediction is within 11% "- said Professor of Economics, New Economic School (NES) Konstantin Styrin.

    Methods of fighting inflation are well known: not to increase the money supply, to limit profitability of financial investment, slow growth in demand, transfer the practice leader goskonsaltinga Alexei Kalinin. And besides, to restrict the growth rates, enhance and stimulate product offering and is not strongly restrict imports, adds Matrosov.

    But in the current selection of tools is limited.

    Sterilization of money to which the government actively resorted to crisis, to fight inflation, now threatens to undermine economic growth, which is already weak.

    " Sterilize the money supply, as was done in the 2000's, is problematic. First, the deficit budget for 2011 has already been approved. Secondly, the surplus could be achieved either by raising taxes or reducing spending. And one, and another would reduce aggregate demand and would have slowed the recovery growth ", - said Styrin.

    Involved will be primarily monetary policy: inflation will hamper the efforts of the Central Bank on monetary and foreign exchange markets, said Kalinin.

    But this method of inflation control as the introduction of maximum prices for food, experts estimate unambiguously negative: it could lead to shortages or poor quality goods.

    ' Not only is the practice of the Soviet Union, with its empty shelves, but some experiments governors early 1990-ies have shown: "as soon as we introduce price controls, once a deficit, the product disappears from the market, followed by an even higher rise in prices on the shadow, not covered by official supervision of the market " Reminds Kalinin. More sensitive measure would subsidize producers and sellers, adds Styrin. But the practical implementation of such decisions in the Russian context is problematic, experts say.

    "Do not limit price, and nurturing a competitive environment, elimination of administrative barriers to business - that's the best solution to the problem "- reminds Matrosov. But such work should be conducted regularly, experts say, but not when prices are getting out of control."(snip)

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