Thursday, August 05, 2010

Grocery bills going higher - no surprise to us.

Regular readers no doubt recall seeing several charts and articles indicating the continuing climb of food prices, in complete defiance of the government's obviously false claim that there is no significant inflation in the US economy. Of course, we should expect imported fruits and vegetables to continue to increase in price, as the price of oil for their transportation continues to inch upward. What is harder to explain is why a staple commodity that we ourselves export should be increasing in price at such a steep rate.

National Inflation Association
Thursday, August 5, 2010 4:08 PM
Wheat Prices Up 71% Since June
Editor, NIA News (sent by email)

On November 26th a member asked us on NIAnswers, "Besides gold and silver what is the next best investment before inflation hits?". NIA's response was, "We are most bullish on agricultural commodities. We see a huge opportunity right now in wheat. Wheat is currently down 80% from its inflation adjusted all time high from the 1970s."

NIA also wrote an article on October 30th entitled, "U.S. Inflation to Appear Next in Food and Agriculture" in which we said, "Wheat is currently down 60% from its all time nominal high set in 2008 and 80% from its inflation adjusted high set in the 1970s." We highlighted how wheat had only bounced 13% from its lows (which was much less than other commodities) and said that we expect "increased demand for wheat".

Wheat prices surged today to $8.08 per bushel up from $4.72 per bushel in June. That's a shocking price increase of 71% in less than two months. Combined with rising oil prices, Americans will begin to see massive price inflation in the months ahead in the two areas that matter most: food and energy...


The reason wheat prices fell in the first place to below living wages for independent farmers was due to massive subsidies to giant agribusiness firms - corporate welfare at the expense of family farmers and sustainable agriculture. That and the "Wal-Mart Effect," wherein giant agribusiness firms simply refuse to buy the farmer's produce at anything above a certain price to keep their own costs down, regardless of how ridiculous that price may be to the farmers. This is why more and more family farmers and independent farmers (and, in fact, many farmers who have been working under contract for corporations, too) are abandoning farming in this country, and it doesn't bode well for our continuing food supply.

So prices are continuing to rise due to decreased supply (less farmers and more bad weather), increased transportation costs, increased petrochemical costs, and one other factor - the declining value of the US dollar. Other countries are aware of the problem - but the US public seems oblivious. Their dollars buy less and less, but they don't get it. Russia, however, does.



They have no confidence in the paper currency or they wouldn't be buying gold like it's going out of style. Recall China is also increasing their position in gold and is quietly selling off their US treasury notes (and not buying much in the way of new ones). They also have no confidence in the US ability to handle our debt except by printing more and more worthless paper dollars. They're worth nothing, folks, because they're backed by nothing but the "full faith and credit of the US," meaning your tax dollars and whatever hard assets (gold, land) the Federal government controls. Tax revenue is not sufficient to pay US obligations and EVERYBODY knows it except the man on the street for some strange reason. Even a glance at a real unemployment chart ought to disabuse anyone of the notion that the US is solvent.





Tax revenues are, of course, largely based on jobs and the US has lost most of its living wage jobs - mcwallywort jobs simply do not create sufficient tax revenue to run this country. Those who do have fairly decent wages have often seen their overtime or regular hours cut back, or perhaps a reduction in their hourly wages. This means households have had decreasing income over the past two years and again there seems to be no real end in sight. Nor does this situation generate enough income for households to continue to buy the same amounts of food as they have in the past when the prices of those foodstuffs are climbing at the rate of 10%+ a year with no sign of relief for the foreseeable future.

What can a family do?

First and foremost, a budget for groceries is an absolute necessity, and cutting down on eating out is an imperative. But how can you know what to buy and what not to buy? With a spreadsheet. It's very simple. You know what products you usually buy - if you don't already save your receipts then save your next several weeks of receipts. Then make a spreadsheet with all the products you usually buy, each item and it's size or quantity as the first column. In the second column, enter the prices of these items from your receipts from the place you primarily shop for groceries. If you have more than one place you usually shop, add more columns. Make sure the prices you enter are the regular prices, not sale prices - and update the spreadsheet every week after you go to the store(s).

This will enable you to do two things. One, you can compare the prices of the item and different stores and see where it should be purchased. You might be surprised to find that some items are more expensive at one store than the other. Some things you thought were bargains may not actually be. And in some cases, it's cheaper to buy things individually rather than in bulk, especially if your budget is limited and you aren't actually going to use THAT many of something in a short amount of time.

Next, take the sale flyers from the stores to check for sale prices, and begin collecting coupons - not just from the Sunday paper, but actually go online and actively search for coupons from the manufacturer's webpages of the products you are most likely to buy. Sign up for weekly coupon emails, also, and either print them from your home computer or have them put electronically onto your store loyalty card.

Now, armed with the regular prices, sale prices, and what coupons you have available - you use the spreadsheet to plan a menu for the week. You have a set budget, of course, for each week's worth of groceries. The idea is to figure out what the cost of your shopping trip will be in advance so that it sticks to your budget.

Armed with such a menu and a shopping list from it, go shopping. You may be able to take advantage of unadvertised specials on some of the items on your list, or you may decide to substitute an unadvertised special for some item on your list that is only available at regular price - so keep a calculator with you to make sure the on-the-spot changes you make are still within your budget.

This may all seem daunting at first, but once you get your spreadsheet going it only takes a few minutes each week to check the prices against your new receipts and update them. You might even want to consider putting a "date" column into your spreadsheet so you know the last time you updated the price on something. If you don't buy that item very often, you can always call the store and see what the price is before you go - or leave a "fudge factor" in your spending plan for that week in case this year's price is way off from last year's for the infrequently purchased items. Again, use your calculator and be sure you're within your budget. It only takes a few seconds.

Of course, another thing you can do is start your own home victory garden for fresh in-season produce, and even learn to preserve the fruits and vegetables you grow yourself for the off season. That doesn't mean you never buy fresh out-of-season items, but since these are always more expensive than in-season items you will want to minimize such purchases. If you don't have a yard yourself, your shul or federation could start a community garden comprised of several small plots that families could rent each growing season, as large or small as you wanted.

A third option is to join a local CSA to obtain locally grown items straight from small farmers to cut out the middle men and get the freshest product at fair prices.

A fourth idea is to get together with some family, friends or neighbors and go in together on bulk items that you don't use a lot of in a short time. That way you all get the bulk price but nobody has to outlay the cash for the whole box/bag of items that will just sit for weeks or months.

Where wheat and other staples is concerned, we are all going to have to tighten our belts and simply pay more for what we need, or learn to do without. There is no economic indicator telling us the prices of foodstuffs are going to go down and it's a good idea to actively consider how to deal with continually rising food prices. Our communities are sadly lacking in self-sufficiency, but that doesn't mean individual households can't plan ahead.

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