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The Rising Threat of Soaring Food Prices

We’ve been in what one could only call a lull … the time between the cost of commodities rising and when those costs get passed on to consumers. Economist and corporations have all said that starting this month and April, we’ll begin to see those higher prices hit the grocery store shelves. And because food is such a large portion of most people’s budgets, those price increases can only present a challenge to family budgets that are already struggling just trying to manage the essentials.

According to the Food and Agriculture Organization of the United Nations, the factors driving food prices up include global supply problems and natural disasters, such as the floods that hit Australia after years of drought, and the fires and drought in Russia that has brought them to the international buyer’s market for grain this year instead of exporting like they usually do. In the United States, wheat (which is our fourth largest crop produced) is showing a marked slowdown with only 26% of the crops in Kansas showing good or excellent following extensive dry weather. Overall, wheat futures are up by over 49% from last year.

The price of sugar reached its highest price in 29 years earlier this year, but above-average rainfalls may hurt crop harvesting. In addition, this year’s sugar production may be delayed because of ethanol shortfalls. Ethanol and sugar are the two largest exports of Brazil, both coming from the sugar cane grown. Other sugar-producing countries, such as Uttar Pradesh, are also reporting shortfalls in sugar production.

While in more developed countries these prices are not causing millions of people to be pushed into poverty the way it is in less developed countries, it’s still a cause for concern. Food prices are expected to rise and additional three to eight percent overall by the end of the year, and those prices will not likely come down any time soon. In fact, food prices are rising faster than most other products.

In Canada alone, lettuce was up 34.5% and potatoes were up by 11.5%. Coffee showed a 6% increase and milk a 4% increase. Globally food prices rose by 25% through 2010, according to the United Nations. In the United States, according to the U.S. Labor Department, fresh vegetable prices leapt by nearly 50% in February alone. This spike in food costs is one of the main factors spurring the revolutions in North Africa and the Middle East.

And as we’ve seen, because of a “global” economy, those revolutions affect our pocketbooks as well. As of this writing, oil is trading at over $105 a barrel. This hits farmers extremely hard, who have to factor in fuel costs to their crops prices. And because of the use of cross-country transportation to haul this produce all over the United States, those fuel costs are also factored in again at the wholesale and retail levels.

And because the EPA has given the nod to increasing the amount of ethanol being blended into fuel (from 10% to 15%), that will mean more corn will go to fuel instead of food. By 2022, congressional mandates insist that our ethanol consumption triple from what it is now. Government bureaucracy and green mandates seem intent on starving people to death.

And then the growth in China and India of their middle class is spurring an additional demand for goods that has not been present until very recently. This increase in the demand for meat (particularly by the Chinese) is an additional strain on lower grain yields since ranchers have to feed those stock animals. It’s a never ending vicious cycle, and one that we must confront head-on. We cannot afford to continue with piecemeal solutions for different problems, when those solutions affect more than the problem they’re attacking, especially as it pertains to the food supply.

First off, contact your legislators and demand that government mandates that drastically affect the ability of Americans to put food on their table be rescinded. And if your representative won’t cooperate, then work to vote them out in the next election.

We must also work toward developing a monetary policy that doesn’t rely on fiat money, another factor driving up inflationary prices. We already have that in the United States, but Congress ceded its authority to the Federal Reserve in the early part of the 20th century. It’s time that Congress reestablish control over the Federal Reserve and return us to a sound currency backed by tangibles.

And third … grow a garden. We still have access to heirloom seeds, and those are your best hedge against inflation. Grow your own food, and then save some of those seed for next year to plant another crop. Even if you live in the city, you can still utilize container gardening to grow food for your family to eat.

In addition, there are sprouts as well. You can have sprouts growing and ready to eat within 3 to 5 days. The bottom line is, even if the politicians do everything they can to bungle the American Dream for most of us, we still have options available.

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