News comes that Americans are hoarding food. The big discount stores are apparently rationing rice, for example.
"Sam's Clubs, Costco limit bulk rice purchases," said an AP story last week.
Today, the New York Times talks of a "recession diet," in which shoppers try to switch to cheaper foods. And there is talk of a drought this year, further reducing the supply of available grains.
"We've reached the peak for grain production," says Resource Trader Alert 's Kevin Kerr.
"World farmland planted with grain has declined since 1980, mostly due to environmental factors such as soil erosion, waterlogging and salting of irrigated land, air pollution and water shortages."
"We are also running out of crop varieties and have ridden fertilizer as far as it will take us. Thus, world grain output has been holding flat at around 1.6 billion tons and may begin to fall."
The LA Times mentions consumers "coping with soaring prices." And the Boston Globe reports that drivers are trading in their gas-guzzling SUVs in favor of smaller cars. Maybe that is why Toyota is now the world's leading automaker – selling more vehicles than General Motors.
Gasoline is at about $3.60 a gallon. Milk is even higher, at more than $4 a gallon. Consumers have no choice – they have to cut back. That, too, is one of the essential verities of today's economy. Ours is a consumer economy in which consumers have less money to spend.
"In short, we're facing a crunch in just about every natural resource you can name," Kevin tells us. "But for investors, the indicators for real asset investments are flashing green. My expectation is that we are at the beginning of a major bull market in commodities. That will mean an unending trend of higher prices for the things that keep the world running.
"So the cycle of ups and downs will continue. But now there is a floor – a level commodity prices simply cannot fall below. And the emerging economies – and the booming population – push that floor a little higher each day. It will just take awhile before the market is ready to admit it.
"Until that happens, we can play those ups and downs for tremendous opportunities. And while we're not the only ones who've noticed, we do have one advantage over most investors..."
Bill Bonner
The Daily Reckoning Australia
P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
Related Articles:
- Americans are Paying Record Prices for Energy and Food
- An Abundance of Paper Money is Causing Food Prices to Soar
- The Iowa Floods Send America Into a Season of Hoarding
- Cold Day in Hell When Americans are Not Willing to Spend
- The Food Shock of 2011
About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Comment by John on 30 April 2008:
Speaking of resources, and more particularly, the world's imbalance thereof, the major world shortage is not oil, but food. Countries with out large tracts or arable lands such as the middle east, Australia, Africa, and even China may start to see food shortages in the future. Coupled with the fact that American farmers are switching from low income wheat to more profitable corn and soybeans, this could spell trouble. Future headlines may not speak of oil shortages, but of the amber waves of grain that once staved off world hunger converting to biofuels.
Comment by Andy on 30 April 2008:
yes we could invest in commodities such as food, but SHOULD we? Trying to 'earn' a buck off a necessity of life hurts those who need such commodities to stay below a certain price to stay alive. Havent we learnt our lesson with that other essential, housing?
Comment by John on 30 April 2008:
Andy,
Understand I wasn't advocating a massive move to foodstuff, only raising the concern that the real threat is not a shortage of sweet crude, but of food. The greatest national asset might be arable land, not gold, diamonds, or oil.
Comment by fiscalferret on 23 July 2009:
The Liverpool Plains area with its world class soil and fragile aquifers, is bread basket land
of the very highest importance. PRICELESS now and especially for future generations. It is an increasingly strategic & globally important resource worthy of FIRB oversight. To INVITE the destruction of its integrity in whole or part by coal mining interests without recognising this fact is not one of our governments smarter moves. It's probably as retarded as our limp-wristed financial/superfunds system failing to s-o-m-e-h-o-w facilitate the remaining capex required for our huge and highly strategic rare earth deposit in WA. Our Chinese friends are far less myopic and their available funding for both the above scenarios (et al) - is very seductive. Yeah, lets just grab da cash and blow billions on a cumbersome jumped up wasteful overkill broadband system instead - jus tink ovda jobs diggin holes and der xtreem sik online gamez we cud play - itedby un-reeeeeeel!!. (sorry about the contempt i was hoping it wouldn't show)
Comment by Annie on 23 July 2009:
Well said fiscalferret,
The aquifers and surface flows in this area contribute greatly to flows in the Murray Darling system also. Groundwater is absolutely critical in this area as it contributes to surface flows. Coal mining in this area will require a great deal of the water in the aquifers to be discarded to get at the coal. Years ago when I looked at the legislation, when you extract groundwater for a mining interest there is no charge for that water (could have changed but I don't think so). I hope the NSW water are in there boots and all with some pretty stringent EMPs. There should be lots of questions asked of the feds over this. Stop them getting RIO, they lock someone up, and so they get this as a pay off??? Very sus...
Pingback by Food, Glorious Food – interesting article by Dan Danning | globalsupplycg on 28 October 2010:
[...] Americans Are Hoarding Food [...]