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Food Prices Going Up:


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#1 pug_ster

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Posted 17 May 2007 - 05:00 PM

http://www.marketwat.....F3DCCA31B27A}

If any of you try to buy milk recently, it recently jumped up from anywhere 7-15% for the past few weeks. Why? Because of Bush's mantra that we need more more ethanol for cars, from 7% last year to 25% this year. As a result, the increasing demand raised the price of corn from $2 a bushel to $4 a bushel. Most people don't eat corn itself, but eat the products that is made from corn: from candy and soda. Price goes up to feed the cows, chicken and pigs. So far the food manufacturers, restaurants and grocery stores has absorbed most the price increases but will slowly pass on to consumers.

I don't know about you, but for the past 40 years there's an oversupply of food which drives prices down. I hate to see the price of food raise like the price of gas.

#2 damam

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Posted 17 May 2007 - 06:29 PM

bushes mantra?

this has been the mantra of enviromentalist for over a decade.

#3 pug_ster

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Posted 26 May 2007 - 02:32 AM

Bush probably never has taken into account of supply and demand.

#4 damam

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Posted 29 May 2007 - 03:12 PM

so what you are saying is that the enviromentalist planned to starve out the mexicans all along.



#5 grim_d

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Posted 29 May 2007 - 03:22 PM

uh oh, now EverestX wont be able to afford a glass of milk with his ramen noodles.

#6 pug_ster

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Posted 29 May 2007 - 11:44 PM

QUOTE(damam @ May 29 2007, 03:48 PM) View Post

so what you are saying is that the enviromentalist planned to starve out the mexicans all along.


Figure with the drought at the southeast, the crop yield would decline significantly. I figure that Georgia peaches will be gone with Florida oranges years ago.


#7 gordo1111

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Posted 30 May 2007 - 12:03 AM

Who will fed me those oranges unless some guy comes up with genetically mods the oranges.

#8 trey85stang

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Posted 19 June 2007 - 03:26 AM

QUOTE(pug_ster @ May 17 2007, 05:36 PM) View Post

http://www.marketwat.....F3DCCA31B27A}

If any of you try to buy milk recently, it recently jumped up from anywhere 7-15% for the past few weeks. Why? Because of Bush's mantra that we need more more ethanol for cars, from 7% last year to 25% this year. As a result, the increasing demand raised the price of corn from $2 a bushel to $4 a bushel. Most people don't eat corn itself, but eat the products that is made from corn: from candy and soda. Price goes up to feed the cows, chicken and pigs. So far the food manufacturers, restaurants and grocery stores has absorbed most the price increases but will slowly pass on to consumers.

I don't know about you, but for the past 40 years there's an oversupply of food which drives prices down. I hate to see the price of food raise like the price of gas.


you would rather see an oversupply of food that will go to waste, then hitting market equaliberium?

#9 pug_ster

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Posted 22 June 2007 - 04:24 PM

Unfortunately, for the people who can afford it do waste food. However, many families out there do live paycheck to paycheck and increasing food prices will affect them the most.

#10 gainpresence

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Posted 22 June 2007 - 05:19 PM

Here's a comment from the slashdot article on the same subject
QUOTE
Corn prices have been near historic lows, and now we finally have upward change (which apparently is something the under-educated news media doesn't grasp. Guess we know who flunked out of calculus in school).

I live in rural Iowa and work in Nebraska and have many friends who are row crop farmers. Both corn and soybean prices have finally increased past the government subsidy for minimum prices (which unfortunately has detrimental effects itself). Last year, farmers were dumping crops and not even bothering to store them due to the prices being so low. The took the subsizided minimum price and cut their losses. More farmers were squeezed out of the market. The U.S. economy has had a massive shift from farm-oriented rural economies over the past century (from 95% rural agricultural focused to less than 5%) which automation and technologies certainly improves, but the losses we've seen since 1990 has had little to do with any further automation.

Unless you've inherited at least 2,000 acres, you can't make the finances work in today's row crop economy. Those that are doing fine have more than 3,000 acres per family for corn and beans in our parts. At $2,200 to $3,200 an acre, you cannot purchase new land and go into farming and survive, even with considerable governmental support. You have to have a base of inherited land that has nearly zero cost as a base, and even then you're dependent upon subsidized government crop insurance. Consider these numbers: good corn yields around these parts of the Midwest are 140 bushels per acre. At $2.50 a bushel, your gross income per acre is a whopping $350. Less fuel costs, seed costs, fertilizer and other chemical costs, irrigation, crop insurance, tractor & combine machinery costs, contractor costs for spraying, trucking costs to move crops from the field to market, and any storage costs, you're looking at hard costs of $200-$250 per acre. $100 income per acre, before labor and land cost. Remember, I said you had to already own the land, because if you do the net present value math on 1,000 acres at $2500/acre (6% over 10 years), you'll be paying $340 per year per acre - which is almost as much as your gross profit itself. Care to dive into farming?

So understand that corn prices have been historically low, and now they are finally changing due to demand for the product. Any economist worth his salt can tell you the crops being produced aren't priced right when the total profit from the sale of those crops barely covers the cost of dormant land, let alone all the other expenses (using pragmatic numbers assuming 10% margins bearing full costs, we should expect to see $7 to $8 dollar corn per bushel, or must see a dramatic devaluation in farmland prices). Foreign subsidization of corn crop production has also kept prices unnaturally low, as well as import barriers on U.S. product. Just like global warming, you cannot have a rational perspective if you accept only the extreme outliers at one tail and call that a central tendency. Prices will change, and in this case, regression to the mean [wikipedia.org] is going to occur (meaning that things tend to want to go back to the normal medium, rather than staying at the extremes).

If you're looking for things to panic about, this isn't one of them. Be thankful that we won't lose even more U.S. crop production human capital, or the natural correction of this unnatural trend will be even more dramatic. Be encouraged that poor foreign farmers in Mexico, South America and elsewhere are being paid more for their crops, instead of throwing a couple more billion dollars at the oil elites. If you hate big business, hate the multi-billionaire clubs, hate corrupt oil cartels, then spend your gas money on ethanol fuel and biodiesel.

Just a look from the other side beerchug.gif
(I'm ignoring for a second that it takes more energy to get ethanol from corn than the energy you get back)

Edited by gainpresence, 22 June 2007 - 05:26 PM.


#11 coldasice

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Posted 22 June 2007 - 05:26 PM

Yup yup. Oranges have gone up significatly in the commercial market lately because of the crappy seasons in CA and FL. The general population wont feel it though because the stores will spread out the higher price over more items to make it seem that the OJ isn't as expensive. A few other products will go up a few pennies to make up for the price.

#12 pug_ster

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Posted 23 June 2007 - 04:53 PM

Fortunately, US is known as the food basket of the world, at least 10 years ago anyways. I hate to see the day when the price of corn be controlled by the farmer cartel like the oil cartel today. Many people say that it won't happen. But then again, people didn't think demand finally caught up to supply for oil a few years ago.

#13 pug_ster

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Posted 25 June 2007 - 03:45 PM

http://www.time.com/...1635836,00.html

Interesting article about the rising food prices and the truth is that people spend less percentage of their income on food. It used to be as high as 23% during the depression to now about 10% of their income now. Too bad food like fresh fruits and vegetables aren't subsitized and we have to force illegal immigrants to work on those farms.

#14 agibby5

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Posted 08 August 2007 - 02:37 AM

QUOTE(pug_ster @ May 25 2007, 10:08 PM) View Post

Bush probably never has taken into account of supply and demand.


biggrin.gif HAHA




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