Saturday, December 26, 2009

More bad news for 2010.

Got that victory garden ready to go yet? Britain's "Market Oracle" is predicting a food crisis in 2010 due to the after effects of the financial meltdown. This British analyst believes the US economy will be completely wrecked due to an inability to import food. Once again, we see that China and other big producers of stuff Americans need will be keeping a larger and larger portion of their own produce - and demanding something besides US dollars to ship what they ARE willing to ship. Add this to the US Government cooking the books concerning agriculture (the same way they do everything else) the result is that the US will be in deep trouble. This is now the third or fourth (I forget) source predicting massive price hikes in food prices this coming year.

The Market Oracle Online
Global Food Crisis 2010 Means Financial Armageddon
Commodities / Food Crisis Dec 25, 2009 - 04:12 PM
By: Eric_deCarbonnel

If you read any economic, financial, or political analysis for 2010 that doesn’t mention the food shortage looming next year, throw it in the trash, as it is worthless. There is overwhelming, undeniable evidence that the world will run out of food next year. When this happens, the resulting triple digit food inflation will lead panicking central banks around the world to dump their foreign reserves to appreciate their currencies and lower the cost of food imports, causing the collapse of the dollar, the treasury market, derivative markets, and the global financial system. The US will experience economic disintegration.

...In the face of all these challenges, the demise of the dollar, derivative markets, and the modern international system of credit has been repeatedly forecasted and feared. However, all these doomsday scenarios have so far been proved false, and, despite tremendous chaos and losses, the global financial system has held together.

The 2010 Food Crisis is different. It is THE CRISIS. The one that makes all doomsday scenarios come true. The government bailouts and central bank interventions, which have held the financial world together during the last two years, will be powerless to prevent the 2010 Food Crisis from bringing the global financial system to its knees.

...Early in 2009, the supply and demand in agricultural markets went badly out of balance. The world experienced a catastrophic fall in food production as a result of the financial crisis (low commodity prices and lack of credit) and adverse weather on a global scale. Meanwhile, China and other Asian exporters, in an effort to preserve their economic growth, were unleashing domestic consumption long constrained by inflation fears, and demand for raw materials, especially food staples, exploded as Chinese consumers worked their way towards American-style over-consumption, prodded on by a flood of cheap credit and easy loans from the government.

...It doesn’t matter how high prices go or how desperate people get, no new supply can be brought online until the next harvest at the earliest. The supply must last until the next harvest, which is why it is critical that food is correctly priced to avoid overconsumption, otherwise food shortages occur.

The USDA—by manufacturing the data needed to keep supply and demand in balance—has ensured that agricultural commodities are incorrectly priced, which has lead to over-consumption and has guaranteed disaster next year when supplies run out.

...All someone needs to do to know the world is headed is for food crisis is to stop reading USDA’s crop reports predicting a record soybean and corn harvests and listen to what else the USDA saying.

Specifically, the USDA has declared half the counties in the Midwest to be primary disaster areas, including 274 counties in the last 30 days alone. These designations are based on the criteria of a minimum of 30 percent loss in the value of at least one crop in the county. The chart below shows counties declared primary disaster areas by the secretary of Agriculture and the president of the United States.

...The same USDA that is predicting record harvests is also declaring disaster areas across half the Midwest because of catastrophic crop losses! To eliminate any doubt that this might be an innocent mistake, the USDA is even predicting record soybean harvests in the same states (Oklahoma, Louisiana, Arkansas, and Alabama) where it has declared virtually all counties to have experienced 30 percent production losses. It isn’t rocket scientist to realize something is horribly wrong.

...The USDA is terrorized by the implications of higher food prices for the US economy, most likely because it knows the immediate consequence of sharply higher food will be the collapse of the US Treasury market and the dollar, as desperate governments and central banks dump their foreign reserves to appreciate their currencies and lower the cost of food imports...

...In this reality, the US farmers have suffered the worst harvest season ever seen.

...Farmers can’t be going bankrupt across the US thanks to the worst harvest season ever seen while at the same time producing the USDA's Biggest Crop Ever! Someone is lying, and evidence supports the farmer’s story.

...On top of the worldwide abnormal weather, the low commodity prices and lack of credit caused by the financial crisis harmed production. The lack of credit curbed farmers’ ability to buy seeds and fertilizers limiting production, and low prices at the end of 2008 discouraged the planting of new crops in 2009. In Kansas for example, farmers seeded nine million acres, the smallest planting for half a century.

Between the effects of the financial crisis and the abnormal weather experienced across the globe, the idea that 2009/10 saw record harvests of anything is pure fantasy...

...The true financial crisis begins when the world realizes that there are couple months food supply missing from 2010. The last two years were a gentle, mild preview of the real thing.

Total Panic

The sudden, shocking discovery that food supplies are running out will produce total panic. The reaction will inventory building — hoarding –at all levels. Major food producing nation will export bans (India has already banned food exports). Producers, Middlemen, And Households will rush the acquire supplies. All this hoarding will wrosen the crisis by throwing supply and demand further out of balance: export bans cut supply available on international market and inventory building increases demand. Food prices will more than double...

Whew, that's enough headache for now. I skipped the long, tedious example of the 2009 soybean crop bad harvest and import/export figures, but feel free to read the extended article if you're really interested. The rest of the article talks about how foreign governments will drop the US dollar and treasuries like a hot potato to prevent their own poor and lower middle class people from starving due to the monetary swings that will result from this agricultural mess. They will throw Americans under the bus - as well they should. The rest of the world has no obligation to keep us fat and sassy, now do they? It's time we all got used to that idea, class. When push comes to shove, foreign governments are going to protect their own, and not care one whit about Americans.

In fact, they will be laughing all the way to the bank as the American smugness and arrogance goes down the tubes along with our food supply and our economy. We were so sure that we could continue to force the rest of the world to provide resources for us that we bet the farm on it, literally.

And we're going to lose it.


Catharine said...

This is the first I have heard of a food shortage. Very scary. I predict that sometime in the future what will destroy human society as we know it are wars over water. One day our over-consumption and poor planning will come back to haunt us, in a *big* way.

Until then, shalom and teach your children how to live for a sustainable future.

Ahavah Gayle said...

When you consider that 40% of the food people buy each month ends up being thrown in the garbage (and ditto for produce, fresh meat and dairy at the grocery stores):

...and that 60% of Americans are obese:

...I would point out that there is a LOT of slack in the American food system. IF - BIG IF - everyone acted reasonably and bought only what they really needed, no one would starve. However, as this article points out, they will not act reasonably - they will hoard, which will make food unavailable to the poor. It's another symptom of America's sick culture.