Agflation Threat: Food Price Trend is ‘Terrifying’

by | Sep 29, 2010 | Commodities, Emergency Preparedness | 31 comments

Do you LOVE America?


    Repeated warnings about food stores and rising prices over the last year have gone unheeded by the masses, who remain concerned about stock markets, Mike ‘The Situation’  and Snookie’s next Jersey Shore party destination, and whether or not they will be able to upgrade to the next iteration of the iPhone before the Jones family next door.

    But while Americans continue to put focus on consumption, a hidden menace is creeping up and will eventually spill into the mainstream – albeit too late for those who weren’t paying attention. Though not yet reflected in day-to-day retail prices of food, it’s only a matter of weeks or months before consumers start to realize their grocery bills are increasing by 20%, 30% or more.

    UK Telegraph commentator Ambrose Evans-Pritchard writes about the growing concerns of food production around the world:

    The Moscow bank Uralsib said half of Russia’s potato crop has been lost and the country’s wheat crisis will drag on for a second year, forcing the Kremlin to draw on world stocks.

    Wheat prices have risen 70pc since June to $7.30 a bushel as the worst heatwave for half a century ravages crops across the Black Sea region, an area that supplies a quarter of global wheat exports. This has caused knock-on effects through the whole nexus of grains and other foods.

    “We had hoped things would calm down by September, but they haven’t: more commodities are joining in,” said Abdolreza Abbassanian, grain chief at the UN’s Food and Agriculture Organisation.

    The UN fears a repeat of the price spike in 2008 that set off global food riots. Wheat prices are still far below the $13 peak they reached then, and the global stocks to use ratio is still “safe” at 22pc. However, the outlook is darkening.

    “It is not yet a crisis but things are precarious. If there is another bad year in Russia and Ukraine, this will leave us prone to shocks. All it takes then is one piece of bad news,” he said.

    In 2008, when energy and food prices sky rocketed to historical highs, Americans were under the impression that things had never been better. No one realized that the added pressure of high food, energy and commodity prices had lead to one of the deepest economic recessions in our history.

    While Americans were enjoying filet mignon and upper-class dining experiences, billions around the world were on the brink of starvation. Hungry people the world over were protesting in the streets, not because of politics, but because they couldn’t afford to eat.

    The following pictures from around the world give us a glimpse of what life is like when food is too expensive for the lowest classes of society:

    Circa April 2008
    Source: The Road to the Horizon

    food riots haitiFood riots in Haiti

    food protests mexicoFood protests in Mexico

    food riots indiaFood riots in India

    food protest argentinaFood riots in Argentina

    food riots egyptFood riots in Egypt

    food riots mozambiqueFood riots in Mozambique

    food riots bangladeshFood riots in Bangladesh

    Philippines ProtestFood protest in the Philippines

    For those of us living in consumptive comfort here in the United States, watching children, friends and neighbors starve is something only depicted in Hollywood productions. But outside of our borders, it’s real – and it’s happening to real people.

    In a recent correspondence SHTFplan reader Dennis suggested that there is a significant chance that a large-scale global food crisis is looming. Russia’s wheat problems are only part of the global food distribution network:

    As most folks know, Russia has shut down it wheat exports. To add to their problems, now they don’t have enough rainfall to plan winter wheat for next year’s harvest. Pakistan was a major grain grower. Their production is all but wiped out due to floods. They do not have the weather or resources to replant for next season. Tens of millions are directly affected. China is now importing corn and quietly locking in large tracts of crop producing land in Africa, S. America and elsewhere. We may have a “perfect storm” brewing concerning a long-term, global food crisis right at our doorstep.

    And the problems aren’t just limited to the third world and emerging economies. An article published by Eric deCarbonnel of Market Skeptics gave advance notice in December of 2009 about the global food disaster being just months away. According to deCarbonnel, the U.S.D.A.’s food reports are grossly exaggerated and we have nowhere near the wheat and other food commodities in our reserves that the government has reported.

    When food prices shot up in April of 2010 at a monthly rate of 2.4%, we were concerned that a continuation of the trend could lead to serious inflationary pressure on food and estimated that costs could rise 25% to 30% per year. This alone would put significant strain on an unsuspecting U.S. consumer, potentially leading to even more economic malaise.

    If you thought that was bad, consider what is happening in commodity markets today.

    While the Federal Reserve is taking action to fight deflation in the broader economy, the real story is that inflation, or in this case agflation, is alive and well, and it could lead to serious financial, economic and social catastrophe if not reined in.

    Karl Denninger of the Market Ticker points out that commodity prices for agri-based products have risen significantly in just the last two months:

    This is the game being played to “pump confidence” in the stock market.  The Fed comes in and “POMOs” their so-called MBS “rolloffs”, and the money immediately goes into speculation.  This drives up equity prices, but it drives down the dollar by more (about 12% since this new “POMO” program began in June) and in turn this is immediately reflected in higher commodity prices.

    Corn, 330 -> 508 today, a fifty four percent increase.

    Wheat, 425 -> 694, a sixty three percent increase.

    Soybeans, 893 -> 1125, a twenty-six percent increase.

    Rice, 9.55 -> 12.55, a thirty-one percent increase.

    Oats, 188 -> 344, an eighty-three percent increase.

    All of this, of course, is food.  Both directly, in what you eat, and indirectly in what you eat eats.  It’s feed for poultry, beef and pork, along with your direct consumption.  And all of it is up at inflation rates that are in pure hyperinflation territory – all of these changes in price are over the last TWO TO THREE MONTHS! Annualized that rate of change and you see terrifying numbers – from clean doubles to quadruples.

    Those who claim that “all that will happen is that oil will go up a bit” are dead flat wrong.  The move has already happened.  The debasement of the currency that Bernanke has foisted off on you as “good” by “supporting” the stock market has in fact led to some small support in the stock market.

    But it has added anywhere from 20-80% to the cost of the materials that go into your food in the last three months alone, most of it due to speculation – exactly as was OIL when it went to $147 and drove gas to the moon a couple of years ago.

    For those in the middle class and better, this won’t kill you.  But for the “less fortunate” – that is, the middle class and below, this is ruinous.

    It may, in fact, cause literal starvation.

    If you think a $100 – $200 weekly grocery bill is bad, how will you feel when it’s two, three or four times that?

    We will not discount the possibility that the food prices are being driven by mass speculation, as they were in the bubble top of 2007/2008, which may once again lead to a collapse in these prices if (and/or when) we experience a broader economic and financial market crash. However, it is clear that the United States and most other countries around the world are in a race to the bottom in terms of currency manipulation, as was recently stated by the President of Brazil – which means that as currencies around the world are debased, there will be a steep price increase reflected in essential commodities like food and energy.

    In Wealth Preservation, Investing, and Prepping in 2010 we wrote about the imminent destruction of the US dollar and the effects that may have on asset prices – and one thing is clear if this theory comes to fruition – the price of everything important to your daily survival is going to rise.

    As such, we continue to be of the opinion that in addition to traditional investment vehicles to protect wealth during times of economic crisis and government instability, investing directly into hard assets is a necessary component of emergency preparedness.

    In the case of rising prices and agflation, the most effective investment vehicle outside of traditional paper commodity investing is to acquire physical possession of foodstuffs.

    Though one cannot store everything you’d like due to cost and freshness, essential foods critical to survival such as wheat, corn, rice, beans, oats and fats can at the this time be purchased for reasonable prices at retail outlets and significant discounts when purchased in bulk.

    A 25 lbs bag of rice, for example, is currently available for about $13 from a local grocery retailer. If a food crisis were to become reality and mainstream news begins to report on it, you can be assured that this bag of rice would rise significantly. Even an adjustment to reflect the current commodity market price could boost the cost of that bag of rice from $13 today to $17 literally over night; and that could happen right now.

    Thus, we recommend to those of our readers concerned with the potential for hyperinflationary food prices over coming years to store the essentials. If not for a catastrophic emergency, then simply from an investment standpoint.

    If packed properly, the aforementioned essential commodities can store for, literally, years. Rather than paying two or three or four times the price a few years from now, investing in grains and other food provides not only a great investment opportunity, but peace of mind for you and your family.


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      1. It will be at least a year before we see any substancial increase in food prices.  Maybe even 5 years.  Deflation has a hold on us right now. 

      2. Corn, 330 -> 508 today, a fifty four percent increase.
        Wheat, 425 -> 694, a sixty three percent increase.
        Soybeans, 893 -> 1125, a twenty-six percent increase.
        Rice, 9.55 -> 12.55, a thirty-one percent increase.
        Oats, 188 -> 344
        Gotta love that deflation, huh Stan
        The only way to survive is to separate yourself completely from the criminals economy.  If you get a FRN, trade it for something of value immediately.

      3. Nah, I will survive and flurish.  Food prices are for the most part pretty good. They won’t be any higher  in 6 months and I will stand by that. 

        Trust God, Gods creation, and stop worrying.   ” Take no thought for tomorrow, for tomorrow with take thought for the things of itself.  Each day has it on problems”

        Stop worrying.  Why do you say, ” What shall we eat, or what shall we drink?  Behold the birds, they don’t sew or reap or gather into barns yet your heavenly Father feeds them.”

      4. Get some Wright Brand Bacon NOW.

      5. Comments….. I am a small farmer in the Central Valley of CA. Believe it or not, about 28% of the agristuff grown in this state is discarded due to written mere echnical specifications put out by none other than the criminal politicians, like Pelosi, etc, etc of course it’s in the name of consumer safety.

        Some of the best fruit I’ve ever tasted was up picked off the ground, where fruit goes, when nature…. aka gravity takes it.

        Just this amount of discarded food alone is enough to feed several countries in distress, including our own. And when the big crash hits, you can bet folks will be eating this good food, regardless of the fact that gravity mades it’s mark.

        On a side note, as a very experienced agriculturalist, the REAL reason for S510…is to stop folks like me from literally witnessing the highly destructive and extremely challenging efforts required to get basic vege/fruits to grow…period, for one or many reasons, including CHEM TRAILS, which I can directly link to destruction of my figs, near Davis CA, last winter.

        Metal ion aresols stop fruit ripening and maturing. The Pelosi government is dumping metal ions and chemicals over the SF bay area for the purpose of (not limited to) extracting water vapor from terrestrial sources forcing an atmospheric tug of war with precipitation. I witnessed this many times last winter. They DO NOT dump these chemicals over the concentrated agribusiness sites like Crows Landing, CA near Modesto, keeping the “big” guys in business.

        The bottom line ….it’s nearly impossible to grow anything without tremendous personal energy and brain-trust input these days.  Put that in yer pipe and smoke it.

        Don’t believe me? Get to know your soil, the evaporative transfer rate from the soil to the atmosphere is accelerating, S510 will stop the ones who know the earth/soil from making any noise and bringing this observation to the publics awareness. Pretty soon you’ll have better results growing food on Mars than Earth.

      6. couple rising food prices due to shortages with explosive increases in oil prices and generalized inflation when the dollar defaults. this is a potential triple- compound disaster.

        all you guys who voted for all those democrat and republican banker trollops who caused this evolving set of problems should relax, stop your whining and take your medicine.

      7. I’ve had the thought before that rapidly rising food prices may just be the catalyst to kick off a hyperinflationary episode. I thought this back in 2008 when oil went to $147 and the cost of a bag of rice doubled in many retail places like Costco’s. Then of course the wheels came off the economy and everything crashed in price.

        Now that the Federal Reserve and Treasury have established a precedent for bailing anyone and everyone out (well except for us), it seems very unlikely they will ever allow another deflationary episode to come to pass. Meaning, these higher prices could be here to stay this time. It seems we’re hell bent on following the same trajectory over and over, only this time everything is in place to not only stop deflation but to promote inflation.

        It makes perfect logical sense (to me anyway), that if you drive up the cost of energy/food people will trade in their FRNs even faster for things of value. So money velocity goes way up… we already know the supply has gone up.

      8. If you live in a wealthy western country and have capital why worry about food? Who just bought a new mobile phone? That’s 2 years supply of oats or rice probably. I bought a $350 winch this week, if i was concerned about food prices I’d have bought 100 kg of kidney beans instead. They last just as long.

        The price of imported Chinese toys will go up faster than food IMO.
        Watch the price of oil, when it doubles back to $150 then get worried about food. It takes a lot more oil and natural gas to produce process and deliver an iphone’s dollar equivalent of the grains than an iphone itself consumes.

      9. Tom – Thanks for the laugh.  Love meat candy……..  Sorry didn’t mean to laugh at a possibly bad situation getting worse.  Love my stores of goodies in the basement.  Buy two and put one away for later.  Love the garden…still putting out a few tomatoes.      Wright Brand Bacon, lettuce and tomatoes – yum!

      10. This is a classic example of how prepping is a benefit.  Maybe the world won’t fall off a financial cliff and all hell break loose.  Maybe its just that food  prices double.  Sure will be nice eating the food from the garden we grow or the supplementing the store bought high priced food with some of the “1/2 price” food to ride out the uptrend.

      11. Mac,
        Thanks for writing this very important article. I hope folks heed the warning. I have to say that you are a writing and researching “machine”. You and I may be the only folks who know how quickly you were able to get this article completed and on your website!
        As I read the comments here I note that some mention (concerning food prices) the government, the price of fuel, deflation/inflation or other catalysts for or against “ag-flation”.
        The BIG wild card is weather. I’m definitely not a man-caused global warming Kool-Aid drinker. I think sun and earth cycles account for about 98% of our weather, temperatures, rainfall, drought, storms, etc.. That said, what governments do, what the price of fuel is or whether we are experiencing inflation or deflation does not ultimately affect how much food is or will be available on a national and global scale .
        What ultimately matters is this: Will the nations get rain in due season? Will they get floods or droughts instead of rain at the right time and in the right amount? Will the temperatures during growing seasons be in balance–not too warm, not too cool? If the weather doesn’t cooperate–as we are seeing in Russia, Pakistan and elsewhere in a PROFOUND way–then all our human efforts to produce food will fall far short of supplying overall demand.
        If there is insufficient food then the prices will rise. They ARE rising, as you pointed out (Yes, it’s partly speculation, but that is based largely on tightening supplies and less than rosey prospects for future harvests). It is simply supply and demand. Speculators can play games with the prices but supply and demand will ultimately rise to the forefront of our individual and collective realities.
        We all have to eat. If the supply tightens, the prices will go up. Many people in this world do not have the “price of admission” to an adequate diet now–as I type this. Plan for the worse and hope for the best is a good rule to follow. Thanks again for getting this article out in such a timely manner. Keep up the good work!
        Dennis A.K.A. “Ben There Dundat”

      12. I stocked the basement from  I’m set with a long term storage one year food supply.  I wish everyone would do this…then you would never have to worry about stuff.  Here’s a challenge, don’t eat for 2 days and see how you feel.  You turn into a zombie.  When you do start consuming again…a glass of milk tastes like life.  You will never look at food the same way again.  I put in a light system to seed start plugs for my garden.  If TSHTF I’ll fire it up and fire up the roto tillers and farm the neighborhood.  It’s all arranged with the neighbors.  This year I had a mountain of tomatos and other garden items.  However, living in surburbia this is just supplemental.  You have to have some basics grain, beans, peas, powdered milk, honey.  And don’t forget the ammo for the zombies. 

      13. Gregg: Will you please write to me directly at [email protected] I have some questions I would like to ask you about farming. Thank you.



      15. Btw, hyperinflation is certainly to happen.  Somehow the Philippines and Haiti always have problems feeding their populations. 

        Pretty soon America will also run out of food.
        Please be prepared!

      16. Comments…..As QE (quantitive easing) by government continues destroying what ever value the Dollar has left all necessities will sky rocket as the Dollar crashes. That’s where PM’s come in handy, they will preserve you’re purchasing power for the time being. As the printing press goes ballistic, gold and silver prices will react accordingly. For those who claim you can’t eat gold, realize that it will help preserve your purchasing power while the system holds, but when SHTF and you have to defend your food and water supply, that’s when PMs become useless and food and weapons will rule the day as in Mad Max. Inflation is running at a steady 6-8 % and rising, that’s more than 4 times admitted by government, those who are asleep at the wheel don’t realize they’re being robbed by this invisible tax. I really feel for the elderly who worked hard all their lives to see their retirement nest egg vanish, but soon we will all feel the deadly effects of hyperinflation. Good luck stay healthy, foresight an planning is everything.

      17. Anybody know how to store lettuce long term for BLT’s. 

      18. So who cares, Uncle Ben and the CBO don’t. All this stuff going “up” isn’t counted for a reason. So as far as the fed is concerned inflation is still “0”.

        So forget any cost of living as you continue to deplete your account.

      19. Bill:  Toasted homemade sourdough bread, fresh tomato & lettuce with 3 slices of thick cut Wright Brand bacon.  Real mayo too.  Yum!   I dream bacon.  It’s the only other commodity I wish I could store.

      20. Comments…..There are several issues at work besides weather and speculation.

        Most anything coming off an assembly line has a tremendous mark-up. Food items off the farm don’t. The profit margin for the farmer is pitiful. Direct sales have a decent margin, but the time spent on sales is non-productive time lost.

        So we are left with manufacturers able to reduce profit margins to move inventory, while this option doesn’t exist for farmers. Hence lower prices on manufactured goods, but escalating food prices.

        Another fly in the ointment is lag time. Manufacturers usually have anywhere from 20-60% excess capacity.  More demend just means they can increase production almost overnight. Farmers are limitted by property, operating capital and months of growing season to increase production.

        Most of the developed world has been spoiled by blemish-free food, massive distribution system and under-priced food. Every time a shortage of any food commodity has arisen, imports skyrocket to hold prices down and screw the farmer. This is one of the reasons the family farm has become part of a corporate agri-business complex. The corporate structure has distinct capital advantages when it comes to financing expansion.

        Having owned and operated a market garden, I learned my leasons. I quit and watched my annual income increase by working on another farm. It’s now out of business due to economy of scale problems and the owner got too old and his children just said, “NO!”

        I still raise a family garden and I have watched seeds, fertilizer, fuel, etc increase every year.  It will continue to do so.

        One thing we need to watch for is disruptions in the distribution system. Few will ever realize the complexity of our food distribution network all of which is dependent upon energy costs. Never forget that our own benevolent government is heavily involved in ag and the ag export market. Our food is always an inportant part of our foreign policy fiasco.

        With over 50% of the world’s population now residing in  cities, distribution systems will be strained to the breaking point. Any disruption will create panics and the inevitable food riots.
        For the lettuce question. Don’t attempt to store store-bought lettuce for any length of time. It is several days old before you get it. Fresh cut lettuce needs rapid cooling to just  a few dregrees above  freezing in a humid environment to remove field heat. Kept like this, it will last a week easily. A better choice is a south facing window box and grow one of the more flavorful leaf lettuces year round. Leaf lettuce is cut and come again. As long as you don’t cut it too short, it will regrow rapidly. Instead of lettuce for your BLTs, have you considered raw spinach? Higher food value and once again, cut and come again. As the plant gets old, it will set seed in abundance. Fresh seed, eh?
        Another oft overlooked green is lambsquarter. When small, fresh greens. The seed is abundant to the point of ridiculous and the seed can make a passable flour.
        For those with rototillers. Consider a propane powered engine. Propane stores for beaucoup time. Not so with gasoline and once again we are faced with the same potential distribution problems. Kits are available to convert the engines as well as plans. Most are for gen-sets, but who needs an operative throttle on a tiller anyway.

      21. Overtheedge, I would call you ‘down the middle’… spot on… We have the failing policies of 50 to 100 years coming to a failing fruition and be pushed by political haters of everything American so we’re gonna get a bruising… in all fairness… those who seek to pull the trigger are gonna get the brunt end of the stick… We in America unlike other fallen nations are armed and the enemy forgot their rule #1, get their weapons from them! LOL
        We’ll be all right, short of thermonuclear annihialtion?

      22. Good points to ponder. Those who “think” will prepare,those who dont will suffer the loss…simple! Go to the ant thou sluggard….easy to forget Jesus also told men to prepare while it was summer,because winter was coming,and while it was light, before the darkness came. I am a farmer,been one most all my life,been living this “prepared” life for decades,got plenty laid back for the storm,and if it doesnt come…? Oh well its a way of life and I dont have to fret about tommorrow…because I prepared while it was summer and while it was light,didnt just blow it off and hope someone else will help me when TSHTF,naw I will just depend on me and the good Lord and hope y’all will too,better safe than sorry! Prices on the farm are stagnet and digressing,food imports are way up,Animal ID,monsantos GM takeover and crop controls are quietly being implimented,less and less people are truely independent or even possess the ability to become so…we are in a world of hurt and food is the ultimate weapon against a hungry people…food for your weapons?…food for your undying obedience? food for yor very soul?Renounce your God and your liberty and we will see to it you eat.. refuse? It may get ugly…and if not? oh well you are ahead of the game!

      23. YES….”Renounce your God and your liberty and we will see to it you eat” and just that we know who you are…. HERE IS THE MARK ON YOUR FOREHEAD.

      24. Comments…..Stan, if you are not worried, why are you reading this blog?


        Stan…you need help.


        Gregg…regardless of where they spray the poison, it will affect all agriculture eventually.

        Which brings me to my question: why would a bird poop in its own nest??

        Do they have another planet reserved for when they can’t eat the crap here because they poisoned the trees, soil, and water??

        And noone is talking about the crap about to happen with the seafood and problems in the will affect all of us.

      29. Pork bellies are down slightly this morning!

      30. C
        Comments….. I have a web site where I give investment advise on penny stocks and stocks under five dollars. I would like to comment about the large increases in the price of basic food stuffs. what I think many of the leaders in the united states government’ and major corporations fail to realize about the burning of corn to produce ethhol’ is using food to produce fuel for are cars  looks  immoral  to people of poor countries when many of the people their are starving’  because corn is a basic food stuff in countries like mexico’  they feel the full impact of any increase in the price of the raw commodity because they use corn meal which like flour is a raw commodity as their most basic food stuff’  unlike the united states where the packaging promotions advertising transportation are the main ingredients in cereal for example not the grains. because the poor in countries like mexico cannot afford any substantial increase in the cost of basic necessties  a huge increase in the price of a five or ten pound bag of corn meal or flour can easily cause a food riot and who do you think someone like hugo chavez will be pointing his finger at when this happens.

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