| 4/23/2008 3:00:53 PM | Load Up the Pantry | |
knightnyte2
Spring, TX
age: 55 online now!
| http://online.wsj.com/article/SB120881517227532621.html
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.
peace... don't be hatin'
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| 4/23/2008 3:03:08 PM | Load Up the Pantry | |
rlynn_1
Hedgesville, WV
age: 39
| wait till this fall when its harvest time,2.79 for a 16oz can of green beans!
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| 4/23/2008 3:46:54 PM | Load Up the Pantry | |
worhtlesswisdom
Dade City, FL
age: 41
| I think all this news about stocking up is being put out by retailers, farmers, and investors trying to make a good profit during the slow summer season.
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| 4/23/2008 4:19:38 PM | Load Up the Pantry | |
paclantchief
New Port Richey, FL
age: 58
| Heard an Item on Glen beck Radio show that Costco Clubs in the N.E. and California were limiting sales of 20 lb bags of rice to one per customer.I thought at the time,he's being alarmists.
With the rising fuel cost,the transport companies are going to have to pass on the costs,and you can bet the food retailers/producers aren't going to absorb those costs.
Ethanol production shall also impact prices.Fewer grains for cattle feed and consumer use,the law of supply and demand kicks in and higher food prices across the board are the results.
It might be time to stock up on nonperishable food while we can still afford it.
To those who say it can never happen,talk to anyone who lived through the depression.
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| 4/23/2008 7:18:24 PM | Load Up the Pantry | |
onelife2live
Janesville, WI
age: 43 online now!
| I keep saying Recession?..might be a Depression...far worse...I see the writing on the wall....jmo
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| 4/23/2008 7:25:27 PM | Load Up the Pantry | |
southbuster
Haughton, LA
age: 31
| I'm gonna hold off on tha stockpilin.......I have a hellofa assault rifle and alotta ammo I'll get somethin to eat........dont you member Hurrican Katrina? Louisiana folks know how to survive.....
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| 4/23/2008 7:40:35 PM | Load Up the Pantry | |
chinatown_girl
Oyster Bay, NY
age: 19
| a little while ago i had a thread asking how would we know when we were in a depression rather a recession.
i suggest everyone stock up on alfalfa seeds and soy seeds; when winter comes u can't grow crops but if u sprout the seeds u will still have some fresh greens to go with rice and make it brown rice for more fiber and vitamins.
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| 4/23/2008 7:42:16 PM | Load Up the Pantry | |
onelife2live
Janesville, WI
age: 43 online now!
| You are smart south and china, food and gas are going to be expensive..get a locking gas cap and a lock on your fridge...jmo
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| 4/23/2008 7:53:10 PM | Load Up the Pantry | |
southbuster
Haughton, LA
age: 31
| China.........I'm not a big rice eater
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| 4/23/2008 8:01:04 PM | Load Up the Pantry | |
onelife2live
Janesville, WI
age: 43 online now!
| No South but you are saying you could hunt when ever you want...Rice and Venison...Mmmmm..Peace
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| 4/23/2008 8:10:21 PM | Load Up the Pantry | |
southbuster
Haughton, LA
age: 31
| I guess tha rice with tha Venison would'n be bad.......hmmmmm hell in that case.....come on depression maybe I can get a lil time off from work and do some huntin
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| 4/23/2008 9:09:15 PM | Load Up the Pantry | |
krupa1
Abilene, TX
age: 40
| Oh for the love of god!
Last time I had to deal with meat heads freaking out like this was Y2K...I swear to f*cking God that I still have almost 30 punds of dried rice and 20 punds of dried beans left over from when it passed and my idiot friend had dry stocked about three hunderd pounds of each for Y2K. After it passed he gave me a hundred pounds of each....it is still viable to this day. Calm down people! if you can buy it at your local farmer's market.....you can grow it.
No, I ain't talking about the crap that comes in a can....
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| 4/25/2008 6:32:38 PM | Load Up the Pantry | |
paclantchief
New Port Richey, FL
age: 58
| I envy you Krup.I have a blackthumb.I have never sucessfully grown anything.
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| 4/25/2008 7:14:18 PM | Load Up the Pantry | |
dej88
Harrisburg, PA
age: 59
| You may think the panic is funny but I use rice everyday and the shelves here are empty and it is being sold in limited amounts in some stores. The prices will defintely go way up on it.
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| 4/25/2008 7:30:55 PM | Load Up the Pantry | |
genieus
Parkville, MD
age: 60
| The price of wheat tripled over the last six months due to the Russian, Australian and Canadian wheat crops failing due to terrible weather conditions. In this country, three of our states that raise winter wheat lost most of this season's crops due to either drought or too much precipitation. Wall Street Journal didn't bother to explain that. It should even out with future seasons. Increased fuel costs will have an impact. Perhaps a good look at our bad food consumption habits is the right place to start saving. Buy locally grown food, try gardening, cut out sodas and junk food, consume less meat, and see how much you can save.
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