Sign of Inflation

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IrvineRenter_IHB

IrvineRenter_IHB

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I want to share with all of you the substance of a conversation I had recently. I am working on a project where the joint venture partner is a farmer (In a joint venture it is common for the landowner to contribute the land and the developer to provide development capital and expertise. They split the profits.) This farmer was saying it has become ridiculously expensive to produce food. The cost of gas, fertilizer and other production inputs has skyrocketed since the FED started lowering interest rates. He said in the next six months, there will be a huge increase in food costs because farmers are either going to have to get higher prices, or they will stop farming (which will create a shortage leading to higher prices.) However we get there, higher food prices are on the way, and they may go much higher. Since food is a necessity, this will cut into discretionary spending even more exacerbating the negative impact of the recession.
 
Your a little late on this story. Rioting over food prices has already started.



<a href="http://news.bbc.co.uk/2/hi/business/7347697.stm">Rising food prices have sparked recent riots in several countries, including Haiti, the Philippines and Egypt</a>





Stagflation is here!



Prepare for the worst, retailers are bracing for more BKs and store closures. Linens and Things is expected to BK this week. The ride is going to get a whole lot bumpier.
 
The prices of rice, soybean, wheat, etc. has already more than doubled since 2007. I posted a thread on "shopping to beat inflation" yesterday:

http://www.irvinehousingblog.com/forums/viewthread/2042/



Here's some excellent articles on gardening:

http://www.backwoodshome.com/article_index.html#fg



If we opt to buy an older home with larger lot, you'd have space to plant your own food, and possibly raise some quail (their droppings can be used as fertilizer). Pressure canner + canning kit is ~$100. We get a lot of sun here in S. CA and you can make or buy a solar cooker.



If you have a small yard or just a patio, it's still possible to do some container gardening to grow food.



You can also save $ on food by cooking, instead of buying pre-prepared meals. Consider the cost difference between cooking your own pasta vs. Italian restaurant.
 
On the other hand, we are the most obese nation in the world so going on a diet, even if forced, would be good for us.
 
[quote author="acpme" date=1208306299]IHB commune?</blockquote>


Not necessarily, but many of us would benefit if we chipped in for bulk purchases.



I can't buy many food items at Costco (or Sam's Club), because the portions are way too large.
 
This is going to put HUGE economic strains on our already over-spent federal budget. Farming subsidies are most certainly going to increase. Ever wonder why people want to be farmers? Because the Uncle Sam makes sure they make money, otherwise we wouldn't have any farmers.
 
[quote author="momopi" date=1208309546]

I can't buy many food items at Costco (or Sam's Club), because the portions are way too large.</blockquote>


What?! A one gallon tub of mayo is way too large? ;-)
 
Guys, according to Greenspan, all we have to do is just trade down. For instance, if you used to buy steak, substitute hamburger.



In my case, I have to trade in Spam for Fancy Feast.
 
it's worse than that.



my wife doesn't even want me to eat burger because of the "bad fats and oils"



she's buying tofu and vegtible based "meat substitutes"



oh, the joys of marriage



P.S. I can afford burgers....
 
I was surprised by this guys comments because I know commodity prices have been going sky high. I figured that farmers were making so much on their crops that it would not be a big problem to cover the increased cost of production. Apparently not.
 
will the government allow that to happen though? farmers have become one of the most protected groups of people in our society. it seems like the govt will absolutely not allow anything bad to happen to them. any politician that allows harm to come to the american farmer would get worse press than one that got caught having an affair in an airport bathroom while throwing a blind baby wrapped in a burning american flag out a window.



also, farmland has the lowest cap rates of any property type.
 
[quote author="halfnote19" date=1208312667][quote author="momopi" date=1208309546]

I can't buy many food items at Costco (or Sam's Club), because the portions are way too large.</blockquote>


What?! A one gallon tub of mayo is way too large? ;-)</blockquote>


Yup! Same with "tub of pickles", "tub of garlic", "tub of <insert item>".



I'd suggest sharing a tub of mayo, but the innuendo alone would troll 3d6 inappropriate responses here...
 
[quote author="acpme" date=1208319950]will the government allow that to happen though? farmers have become one of the most protected groups of people in our society. it seems like the govt will absolutely not allow anything bad to happen to them. any politician that allows harm to come to the american farmer would get worse press than one that got caught having an affair in an airport bathroom while throwing a blind baby wrapped in a burning american flag out a window.



also, farmland has the lowest cap rates of any property type.</blockquote>


The government already pays them not to grow certain crops. I suppose they could just give them money to do nothing at all.
 
my understanding has always been that there is more than enough capacity in the US alone to produce enough food to feed the entire world and at cheaper prices than current or prev mkt prices. mkt prices have been artificially boosted by subsidies paid to farmers to NOT grow certain crops, like IR1 said. the reason was this was to protect american farmers from such low prices that it would drive them out of business (supposedly). peanuts farmers are the most commonly cited example of those who get this subsidy to destroy supply. other people starve and americans waste because farmers need to keep their jobs. when cost of food is being discussed these days, does it account for that?



somehow we have this nostalgic and cultural affinity toward the farmer. we must not let the american farmer suffer! back in the day a pair of good leather shoes cost a good chunk of money, especially when they had to be handmade by the local cobbler. these days machines and children in southeast asia provide enough cheap and plentiful footwear that every american has at least 3 dozen pairs. we can walk into a target and pick up a pair of leather shoes for about the same price as a decent meal. it's a shame we didn't keep the prices of shoes propped up or today we might still have a thriving cobbling industry in each community.
 
There was something in the news lately about there being some sort of federal payment to let the fields lie fallow as Duck & wildlife habitat. Apparently, the crop prices are so high, farmers were finding it more profitable to plant than to take the payment, which upset the wildlife groups.



Also - the capacity to have enough farmland grow enough food to feed your country and them some is a good idea, even if it requires subsidy or some farmland going unused at the moment. Because if things go south (ex. wartime, or crop shortages such as there are now with countries limiting exports) ... you want to be able to feed the people in your country.
 
I have a lot of respect for every member on this board who isn't a troll.



It is with great hesitation and restraint that I write that none of you (specifically, Acpme, LM, and Major Schadenfreud, and the last post by Irvine Renter) have a clue what you're talking about farm policy.



Anon is close to correct. The program you are speaking of is part of the Soil Conservation Service attempting to protect wetlands and 'encourage' farmers to not grow on highly errodable pieces of thier properties.



We've done a great job negoiating trade policy - except for agriculture. Every other country in the world has subsides for thier growers that artificially LOWER the world market price. If everyone on the planet got rid of thier subsidies American agriculture would explode. Once you strip out the subsidies, we are the low cost producer in the world in most everything. And at the end of the day, it's probally a wash to the end consumer.
 
no_vas... you are close to the truth..



The main driver of farm subsidies is to keep maintain a bargaining chip to hammer the Europeans to lower their subsidies. US-European Farm subsidy reduction talks are as bad as US-Russia nuclear disarmament talks. Especially the French, they love their small farmers. The US would love to lower sugar tariffs but hold out as the only way we can talk the Europeans into lowering theirs.
 
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