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Thread: I think 2007 is gonna

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    Default I think 2007 is gonna

    be one expensive year.................... here is another domino tipping. Combined with the China trade Deficit, and the Iran/Venezuela threat to cheap energy..........



    A pantry never seemed like a such a good idea. This is going to affect Beef, Chicken, Dairy,................Anything that relies on Corn; too include you.

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    Default Re: I think 2007 is gonna

    ^^^ the bulk of the blame for rising corn / grain prices is that the 'food' market is now forced to compete with the 'biofuels' market for the same limited supply. There is a body of concern building that rising corn / grain prices are going to cause widespread hunger problems in the 'third world'.

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    Default Re: I think 2007 is gonna

    Quote Originally Posted by Melonie View Post
    ^^^ the bulk of the blame for rising corn / grain prices is that the 'food' market is now forced to compete with the 'biofuels' market for the same limited supply. There is a body of concern building that rising corn / grain prices are going to cause widespread hunger problems in the 'third world'.

    Will this pressure on the "food market" accelerate the rate of illegal immigration into the US? I think so, with what is happening in Mexico. The rest of Central America has a difficult time feeding their citizens without food imports. The Th ird World is a powder keg waiting for a spark. The rise in cost and the limited supply of the rice and grain exported by the US to those Countries is going to rekindle some feuds and Wars there. .........

    This is going to effect everyone.....

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    Default Re: I think 2007 is gonna

    Won't the free market respond by increasing production ? Whatever happened to the farmers paid not to grow crops ?

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    Default Re: I think 2007 is gonna

    ^^^ those farmers are now being paid double to produce corn for US ethanol production.

    Yes, in all probability a shortage of enough corn to meet both the food needs and the alternative energy needs will result in sustained high corn prices. This in turn will prompt the allocation of more farmland to growing corn. However, the 'productivity' of the additional farmland will not be as good as the land currently being planted. Thus the higher farm production costs for extra fertilizer, extra pesticide, extra acres needing to be cultivated and harvested to yield the same number of bushels of corn etc. will NOT result in a drop in the market price of corn but simply a marginally greater supply.

    Mathematically speaking, given the almost guaranteed requirement that 10% of all future US blended gasoline must consist of ethanol additive, there is simply not enough productive US farmland available to meet this sort of ethanol volume even if the food uses for corn were completely abandoned. I suspect that this is part of the reason that GWB is travelling to Brazil right now to talk about high volume imports of Brazilian sugar cane based ethanol into the USA. However this is sure to meet with stiff political opposition since, at present, US ethanol producers receive a 54 cent per gallon kickback (= a 54 cent per gallon tariff being charged for ethanol imported from Brazil) from excise taxes collected during the ethanol fuel blending process.

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    Default Re: I think 2007 is gonna

    Here is from a UK paper the Independent.


    Leads off with....*Snip*ost people in Britain won't have noticed. On the supermarket shelves the signs are still subtle. But the onset of a major change will be sitting in front of many people this morning in their breakfast bowl. The price of cereals in this country has jumped by 12 per cent in the past year. And the cost of milk on the global market has leapt by nearly 60 per cent. In short we may be reaching the end of cheap food.*snip*

    Defines the problem*snip* Like any other self-respecting trend this one now has its own name: agflation. Beneath this harmless-sounding piece of jargon - the conflation of agriculture and inflation - lie two main drivers that suggest that cheap food is about to become a thing of the past. Agflation, to those that believe that it is really happening, is an increase in the price of food that occurs as a result of increased demand from human consumption and the diversion of crops into usage as an alternative energy resource.

    On the one hand the growing affluence of millions of people in China and India is creating a surge in demand for food - the rising populations are not content with their parents' diet and demand more meat. On the other, is the use of food crops as a source of energy in place of oil, the so-called bio-fuels boom.

    As these two forces combine they are setting off warning bells around the world.

    Rice prices are climbing worldwide. Butter prices in Europe have spiked by 40 per cent in the past year. Wheat futures are trading at their highest level for a decade. Global soybean prices have risen by a half. Pork prices in China are up 20 per cent on last year and the food price index in India was up by 11 per cent year on year. In Mexico there have been riots in response to a 60 per cent rise in the cost of tortillas. *snip*

    *snip*he reason for the price surge is the wholesale diversion of grain crops into the production of ethanol. Thirty per cent of next year's grain harvest in the US will go straight to an ethanol distillery. As the US supplies more than two-thirds of the world's grain imports this unprecedented move will affect food prices everywhere. In Europe farmers are switching en masse to fuel crops to meet the EU requirement that bio-fuels account for 20 per cent of the energy mix.

    Ethanol is almost universally popular with politicians as it allows them to tell voters to keep on motoring, while bio-fuels will fix the problem of harmful greenhouse gas emissions. But bio-fuels are not a green panacea, as the influential economist Lester Brown from the Earth Policy Institute explained in a briefing to the US Senate last week. He said: "The stage is now set for direct competition for grain between the 800 million people who own automobiles, and the world's 2 billion poorest people." *snip*

    Why this effects all of us. *snip* Then there is corn. While relatively little corn is eaten directly it is of pivotal importance to the food economy as so much of it is consumed indirectly. The milk, eggs, cheese, butter, chicken, beef, ice cream and yoghurt in the average fridge is all produced using corn and the price of every one of these is influenced by the price of corn. In effect, our fridges are full of corn.

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    Default Re: I think 2007 is gonna

    ^^^ not to worry ... the UK Financial Times has also pointed out the means by which these higher food prices will be absorbed in 'rich' countries like the US, UK, France, Spain etc ...



    (snip)"Viewing globalisation as an overwhelmingly negative force, citizens of rich countries are looking to governments to cushion the blows they perceive have come from the liberalisation of their economies to trade with emerging countries."(snip)

    (snip)"In response to fears of globalisation and rising inequality, the public in all the rich countries surveyed – the US, Germany, UK, France, Italy and Spain – want their governments to increase taxation on those with the highest incomes."(snip)

    (snip)"Their view that opening economies to freer trade is beneficial to poor and rich countries alike is not shared by the citizens of rich countries, regardless of how liberal their economic traditions.

    The issue of rising inequality is now high on the political agenda of every country and will feature prominently in the 2008 US presidential election. "(snip)

    ... in other words, it is highly probable that quickly rising food prices which disproportionately affect the 'poor' will be dealt with by increasing food related social welfare benefits provided to the 'poor'. This will supposedly be funded by large tax increases on the 'rich'.

    However, because of the real world options that are available to the TRULY 'rich' , for example minimizing their tax liabilities by investing in ethanol production facilities thus gaining production tax credits, it will be the middle class who actually winds up bearing the brunt of these new food related social welfare benefit costs ! This action would also reduce the apparent rising inequality between the poor and the 'rich', but with 'rich' actually being defined as anyone who earns more than US$75k - $100k per year.

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    Default Re: I think 2007 is gonna

    From here on forward, mark July 24 at "The is the one day of the year we get Corn on the Cob" day!!! ')

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    Default Re: I think 2007 is gonna

    I grow my own corn.
    Not enough to enjoy all summer long (only 9 stalks), and I'm not good enough at it to get corn like I can get from the Kroger down the street, but I just thought I'd mention it.

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    Default Re: I think 2007 is gonna

    ^^^ same here (basically) except I plant a few rows with a few dozen stalks. But my homegrown corn always tastes better than grocery store corn !!!

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    Default Re: I think 2007 is gonna

    Ugh! is it really that hard to cut back on our driving? Really?


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    Default Re: I think 2007 is gonna

    Quote Originally Posted by Paris View Post
    Ugh! is it really that hard to cut back on our driving? Really?

    Eh? Why I posted this thread was not to highlight fuel costs, but to highlight the rising costs all across the board. That food especially is going to become very expensive, and good stock up on now t buffer yourself from rising costs.

    I drive very little actually. I live on campus and walk to my classes. Ha ha! In fact I have to start my truck once every two weeks just to charge the battery.

    The participants were actually discussing the rapid rise in the cost of living, and the causes for it.

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    Default Re: I think 2007 is gonna

    Ugh! is it really that hard to cut back on our driving? Really?
    Consider this ...

    Since Levitttown in the 1950's, there has been a steady migration of middle class Americans and well paid blue collar Americans out of the cities and into suburban homes. In the meantime many of the jobs have remained in the cities, or at the very least are located in some sort of industrial park or complex that is a fair distance away from suburban housing developments. This means that tens of millions of Americans are committed to commuting X miles per day between their suburban home and their urban job.

    How do you reduce that commuting distance ? Well there are two ways to do that. The person can either change jobs (and attempt to find something local or home based that pays anywhere near as well), or the person can attempt to sell their suburban home and move closer to their job in the city (with all that implies in terms of cost of living, crime rate, school systems etc.).

    There's actually a third way to do that, via state / local gov't investing hugely in public transportation, but the ramifications of huge new gov't debts and higher taxes plus the middle class aversion to riding public transportation sitting next to god knows who / what have pretty much put a damper on the expansion of suburban public transportation in most areas of the US.

    The suburban lifestyle fuel consumption problem does not end with individual people commuting to distant jobs either. It also means that trucks are burning oceans of diesel fuel to transport products out to suburban shopping malls and big box stores.

    In order to significantly reduce fuel consumption which has, as its root, the US suburban lifestyle, fuel prices are going to have to get SO high that the US suburban lifestyle is no longer affordable before suburban Americans are finally willing to change their lifestyle.

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    Default Re: I think 2007 is gonna

    Housing market sure has gone to shit so far. I used to be in the mortgage industry and rates are high right now.... They're saying the 4th quarter could have a small refi-boom because of all the ARM's coming due, but what happens when the people who got into the ARM's 2- 3 years had shitty, and still have shitty credit?! Uh oh! Lenders are backing away from lending to people with bad credit now so, oops.

    Foreclosure's are high now? Ha ha wait another 6-8 months, it'll be even nastier is my prediction.
    Man oh man, what a trip it's been.

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    Default Re: I think 2007 is gonna

    ^^^ agreed on refi's being increasingly problematic in the future. Another factor of course is that American financial institutions don't have very much money stemming from the savings of other Americans to lend out for refi's. The American financial institutions are really dependent on foreign investors as the source of their loan capital. As the US dollar continues to fall off a cliff, and as more and more American financial institutions have larger and larger problems 'selling' new debt to primarily foreign investors, the harder it will be to obtain mortgage and/or refi financing and the higher the interest rates will be. After all, a Euroland investor will expect a reasonable rate of return (say 5-6%) PLUS enough extra earnings to cover their losses as the US dollar drops vs the Euro. Over the past year, it would have taken about a 15% interest rate on the US dollar denominated loan for a Euroland investor to earn 5-6% in terms of Euros.

    The US dollar falling off a cliff will also be the root cause of LARGE US dollar denominated price increases for oil/energy, for food, for other commodities and the things manufactured from those commodities. In a global sense the worldwide price of oil probably won't move much in terms of Euros or Yen or Yuan, but in US dollar terms its price is going to increase a lot !
    Last edited by Melonie; 07-27-2007 at 03:55 PM.

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    Default Re: I think 2007 is gonna

    http://www.virtualcentre.org/en/libr...d/A0701E00.htm

    Meat, dairy, and eggs weren't dirt cheap products until food production methods changed after WWII. Raising and slaughtering 10 billion animals in the US per year isn't sustainable. Price hikes have been a long time coming.

    Ethanol is a wasteful joke, but large-scale animal agribusiness uses more energy than our cars and trucks do, and it wastes protein and calories along the food chain. We've taken our culture's meat consumption habits for granted, and the fact of the matter is that the planet couldn't support a worldwide food web based on the USA's - there isn't enough energy to go around.

    Perhaps the price hikes will cause more people to turn to local/farmer's market/plant-based options, but people feel more entitled to cheap eggs from cage-raised hens than they do even to their SUVs.

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    Default Re: I think 2007 is gonna

    ^^^ your comments about meat consumption being part of the middle class culture are not limited to the USA, as a new trend with important future ramifications is clearly emerging in China.

    Those Chinese who have obtained college degrees, and/or have been fortunate enough to have earned significant amounts of money as a result of China's recent industrial and business development, are no longer content with a bowl of rice. As a result, demand for meat products in China (especially pork), along with demand for eggs, dairy products, edible oil products etc. is rapidly increasing - as are prices for those products.



    As you pointed out all of these food products are energy intensive to produce using 'modern' methods, and doubly so for animal products. China's rapidly increasing demand for animal products cannot be met by their domestic animal food capacity, meaning that Chinese demand now spills over into the world market and raises prices of these products for everyone !

    Those rising world market food prices will wind up being a 'double whammy' for Americans, as the higher world market prices for food will require even MORE devalued US dollars to pay for as the exchange rate continues to deteriorate.

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    God/dess Paris's Avatar
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    Default Re: I think 2007 is gonna

    Quote Originally Posted by ArmySGT. View Post
    Eh? Why I posted this thread was not to highlight fuel costs, but to highlight the rising costs all across the board. That food especially is going to become very expensive, and good stock up on now t buffer yourself from rising costs.

    I drive very little actually. I live on campus and walk to my classes. Ha ha! In fact I have to start my truck once every two weeks just to charge the battery.

    The participants were actually discussing the rapid rise in the cost of living, and the causes for it.
    I meant that as the collective "us" as in Americans. You know, drive less so that poor people don't starve to death?

    I am disturbed by the attitude of people when I suggest that they do things like bring reusable bags to the store or mall when shopping (those plastic bags that Wal Mart is so generous with handing out are petroleum based. Some of those bags are actually made out of corn, too)

    You'd think I suggested that they become vegan by the responses I get. I hear things like "I don't know why I should have to buy into that hippy-dippy crap".

    I used to work at a club in Salem Oregon, about 75 miles north of Eugene. I had two dancers that would carpool with me there for a while. But eventually they both moved on. About 2/3s of the girls at that club were from Eugene. When I started suggesting carpools to the other girls, everyone seemed to have a good reason not to carpool.

    Christ! I just thought it would be nice to split the fuel expenses. I'm well known for not drinking, so it wasn't even an issue that no one would be able to act as DD at the end of the night. It is also nice to have company in the car while driving late at night to stay alert.

    Now I hardly drive at all and I bring my own bags when I shop for anything bagable. It is really simple to just keep your shopping bags in the car and plan a shopping trip all in one day. Most neighborhoods have a grocery within two miles, so getting on my bicycle to go pick up odds and ends that I didn't get on shopping day is really easy.

    And we all know how much American's could benefit from more exercise!

    Anyway, that is what I meant about driving less. Not the cost of fuel, but the but by being lazy we are causing people to starve.

    In order to significantly reduce fuel consumption which has, as its root, the US suburban lifestyle, fuel prices are going to have to get SO high that the US suburban lifestyle is no longer affordable before suburban Americans are finally willing to change their lifestyle.
    And that is a very sad and sorry state of affairs.

    I really think that I'm not really an American. It seems like my values and priorities (Human life, helping the little guy when he needs it, protecting the environment, decentralization of government power) are completely different from what most people value (convenience, personal indulgence, greed, war, imperialism).

    Maybe philosophically I'm really Dutch or Swedish?


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  19. #19
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    Default Re: I think 2007 is gonna

    ^^^ You are certainly an ever decreasing creed of American that is for sure.

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    Default Re: I think 2007 is gonna

    I wish I could have been wrong here. Do prophets of doom ever feel good about their jobs? Usually their crazy so probably they don't know better.

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