I told you so! Been to a grocery store lately?

By
Larry Gilbert
– February 22, 2008Posted in: Classic Juice 1

Exactly a year ago, on February 9,2007, I posted a story entitled “Is ethanol the panacea for our energy independence?” In that story I wrote that “30 percent of this years US corn crop will be dedicated for ethanol. Setting aside this much acreage for ethanol corn will reduce the planting for soybeans and wheat.” Some of that early data was from a Cutting Edge interview with Evagellos Valliantos entitled “Food for thought.”

“The tripling in cost of tortilla’s in Mexico, a major staple of the Chiapas peasants of that nation, is approaching a crisis. In the US the cost of a bushel of corn used to feed livestock has doubled from two to four dollars which will translate into higher prices at the supermarket when we purchase chicken, pork and beef.”

My wife called me from two supermarkets yesterday to say that a gallon of milk at Vons was $4.49 and $3.99 at Albertsons.
I just received the following article by Dale Kasler in the SacBee which ends with a short table that lists Jan 2007 prices Vs Jan 2008

1 pound of cheddar cheese $4.06 to $4.62
1 pound of bacon 3.51 to 3.65
1 pound of spaghetti $0.86 to $1.02
1 pound of flour $0.35 to $0.42
1 dozen grade A eggs $1.55 to $2.18
1 pound of chicken $1.03 to $1.16
———————————————————————————
“Grocery bills jump – no end in sight

By Dale Kasler and Jon Ortiz”

Last Updated 5:58 am PST Thursday, February 21, 2008

“You aren’t imagining things – food prices really are shooting up. And the reasons why aren’t going to disappear anytime soon, including prosperity in China and India and the record-high cost of oil. On Wednesday the U.S. government said the Consumer Price Index rose a greater-than-expected 0.4 percent in January, the result of steep jumps in food and energy prices. Food alone rose 0.7 percent, the biggest one-month jump since February 2007.

Scores of grocery items have become pricier. A pound of cheddar cheese is up to an average $4.62, or 56 cents higher than a year ago, according to the U.S. Bureau of Labor Statistics. A dozen eggs costs $2.18, up from $1.55 a year ago.”Everything I bought today was on sale,” 85-year-old John Hegji said after leaving an east Sacramento Save Mart. “If it’s not a deal, I don’t buy it.”Hegji, who lives on Social Security, said he has started substituting bacon ends for regular bacon, saving about $2.50 a pound.Luquita Hutchinson of Sacramento, who was shopping at a Sacramento Raley’s, said she’s cut back on cookies and other sweets in order to afford main-course items such as meat and bread.”Things like hamburger that used to be everyday food are becoming luxuries for us,” said Hutchinson, 48, who stays home to watch her two grandchildren. The increase in consumer prices complicates the government’s attempts to stave off a recession. The Federal Reserve has been slashing interest rates to encourage economic growth but probably won’t want to make money so cheap that it triggers a serious bout of inflation. The Fed released an economic forecast Wednesday calling for slower growth and higher unemployment this year, but no recession. In the meantime, grocery shoppers shouldn’t expect any immediate relief at the checkout line. Prices of basic commodities – corn, wheat, soybeans – are increasing, which translates into higher prices for everything from cereal to steak. A key reason is rising incomes in fast-growing countries such as China and India and the historic run-up in oil prices, said Bill Schiek, economist at the Dairy Institute of California. Rising incomes in developing countries means more of the population is “moving up the protein ladder” and demanding meat and other trappings of Western-style diets, Schiek said. As millions add meat and poultry to their plates, the demand for feed grains to fatten the animals goes up. So do the prices. The high cost of oil, which settled Wednesday at a record $100.74 on the New York Mercantile Exchange, raises food prices in two ways. First, it increases the cost of diesel fuel used to power farm equipment and agrichemicals spread on the crops. Diesel in California is up to $3.67 a gallon, a nickel shy of November’s record. Second, and perhaps more important, high-price oil has ushered in a booming demand for ethanol and other biofuels, which push up the price of corn and other crops.U.S. farmers responded last year by planting the biggest corn crop since 1944, but they accomplished that by planting fewer acres of soybeans, wheat and other crops. That translated into higher prices for those crops.”It was a zero-sum game,” said Joel Karlin, a market analyst at Western Milling, a feed-grain producer in Tulare County.”

To read the entire story simply click on the following link:

http://www.sacbee.com/103/story/727789.html

As well intentioned as our effort to become energy independent, this experiment is surely a costly one. And at the end of the day those least capable of absorbing these increases are the ones who have no choice as they feed their children or seniors living on fixed income. Basic food staples are items that are impacted as confirmed in the Sac Bee report.

Larry. What would you suggest? Park your car and get a horse.

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