Sunday, June 27, 2010

UPDATE: Food inflation & taxes about to explode

We read several predictions for 2010 and a study put out by the NIA concerning an anticipated large jump in food prices - now Business Insider is weighing in on the issue.

Business Insider
Chart of the Day: Food prices are about to explode.
Vincent Fernando, CFA and Kamelia Angelova
Jun. 17, 2010, 12:05 PM

...A new report from the Food and Agriculture Organization of the United Nations (FAO) and the Organisation for Economic Co-operation and Development (OECD) forecasts soaring global food prices over the next decade...

...Moreover, we won't have to wait until 2020 to see the price hikes. The process is already kicking off. The report forecasts that global prices next year for many animal-related foods will be 10 - 20% higher than in 2009.

Rice is not seeing large increases because it is not particularly needed for factory farming for animal feed. Inflation alone is not the sole cause of the price increases we are seeing for food - giant agribusiness firms having stamped out most of their competition and having to rely heavily on petroleum based chemicals to grow their food are also a big part of the problem.

The price of wheat is falling because more and more people are needing to switch to gluten free diets (meaning wheat-free primarily) because of the genetic modifications that agribusiness has incorporated into the wheat, combined with the increasing load of pesticides and weed killer needed for giant monoculture operations. People's immune systems can't take these unnatural products, so more and more people are having to stop buying them.

The increase in food prices are only the first part of a one-two punch that American households are going to experience in the near future that will wreck our budgets - lets not forget America's incredible debt burden that average households will end up paying.

As we looked at in an earlier FUTUREWATCH post, America has no options other than raise taxes or sell of national parks and other assets to begin knocking down the national debt before it eats all of the tax revenue. And I haven't noticed Yosemite up for sale - have you?

Business Insider
CHART OF THE DAY: Even Without The Obama Splurge, Your Taxes Are Heading Much Higher
Gus Lubin and Kamelia Angelova
Jun. 22, 2010, 4:20 PM

...Even without recent spending, the growing cost of government benefits will result in four decades of rising taxes.Thanks to ten years of rising government costs, the taxation wake-up call will be even more painful.

The Heritage Foundation, a conservative think tank, estimates a $12,636 (inflation-adjusted) tax increase will be needed just to cover entitlement costs.

Wealthy Americans should watch for the tax hikes to begin on January 1, when Obama lets tax cuts expire for people who earn more than 250,000. The rest may spend the rest of their life on the watch for value-added taxes, excise taxes, and more

With half of all tax receipts the federal government receives going to the military, in order to keep everything else going federal taxes will have to be raised, there's no doubt about that. Most state and local government are also starting to nickel and dime people to death with fee and rate hikes of all sorts, and tax hikes are not far behind - not to mention "enthusiastic" enforcement of state and local laws that result in profitable fines. Yes, a lot of this ends up going to the National Guard, too, which is funded in part by each state - and since it is the National Guard that are largely being called up to fight for oil and other natural resources in foreign nations, that means you get to pay for wars you don't support twice - once at the federal level and again at the state level.

The military also distorts the food market - they have to eat, and the more of them there are the more food they take away from the civilian market to be shipped overseas, again driving up the cost of food even more. And, of course, you pay for it all.

The only viable way to reduce food costs is through sustainable organic victory gardens, container gardening for households without yards, community gardens and community greenhouses, and through local farmer's markets. This cuts out the expenses of transportation and middle men from your food budget, as well as providing fresher and more nutritious food for your family. It's time to take these suggestions seriously, class, because it takes a season or so to build up a good garden or greenhouse plot. Even if you've missed the spring season, it's not too late to get started. Some herbs, vegetables, beans and berries can be planted anytime the weather is warm and will produce until the first hard freeze (and some can even survive that). Fruit and nut trees can be planted this year, as well, to get a jump start on their maturity. Don't think it's too late - better late than never!

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