Thursday 24 April 2008

Peak Food & Famine? 2008-02-24 #2

Sunday 24th February 2008 6.04 p.m. #2

Peak Food and Famine? Are we heading for famines around the corner? These are already being discussed on Jim Puplava's FinancialSense Newshour website among others.

The discussion centres around several factors:
(1) Food demand is continuously rising, because of human population increases and increased prosperity in developing countries.
(2) Demand for grains is increasing due to increased need for animal feed as developing countries' populations move towards eating more meat and other proteins.
(3) Corn demand has increased due to the US government mandates that corn-based ethanol is to be used in gasoline.
(4) Increased planting of corn (for ethanol) has diminished other crops owing to less available land. This results in less supply and therefore higher prices for these agricultural commodities.
(5) Corn prices have increased due to demand for corn for fuel in additon to food.
(6) Therefore meat and milk prices have also increased because corn is used as feed for many farm animals.
(7) Net result: more food price inflation across the board. Rising at a far greater rate than the official CPI inflation figures of course (isn't everything?)
(8) Grain inventories are the lowest for many years, despite record harvests. It has been said that new record harvests will be needed every year to satisfy world demand for grains and other foodstuffs for human consumption and animal feed.
(9) Result: possible food shortages and famines in the not too distant future. With higher energy prices people will have to choose between driving their car, keeping their houses warm in Winter and eating sufficient food.

I was told by a friend recently that he is already buying petrol for his car using his credit card - and of course many modern gasoline pumps have the equipment to enable customers to do this! Grimly ironic isn't it, that it is getting difficult to afford to drive to work! The 1990s Britpop band Blur made an album, called 'Modern Life is Rubbish' - oh, how true is that?

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