No Energy Policy Means Higher Food Prices

Higher food prices that we are all seeing today is a direct result of not having a comprehensive energy policy - the cost of everything is directly related to the cost of energy. Is it any wonder we are paying more for everything when the demand is going up for energy in this country by 8% a year but supply is growing at less then 3%.

Worse, now the courts have put a hold on many coal fired electrical plants waiting to see what impact they will have on environment. And don't forget, no new oil wells anywhere in this country or off our shores, and, oh my God, no nuke plants. hmmmm - what's left for us to power our trucks to deliver the food to our stores? Heat our homes? Fuel for the farmers tractors?

I wonder why the price of food is going up and up? hmmmm again!

With the demand for ethanol to power our cars being mandated by the uninformed in our government driving up the price of corn, is it any wonder our budgets are being stretched by the increased price of food as well as fuel.

The media is full of stories of third world countries rioting over the cost to feed themselves as the these poorer countries rely mostly on gain products as their major food stuff. Critical in this aspect is Mexico. Watch what happens when push comes to shove at the border as people flee north to find something to eat. I've posted on this subject several times in the past.

We have a great country here but we must use common sense to make it work to every one's advantage. Allowing a few environmental terrorist organizations to dictate what or how we live our lives is not my idea of freedom to chose. And the fact that so many people have bought into this scam of global warming, carbon credits is very puzzling given they are effected like the rest of us by bad policy.

Now is the time to stand tall, back straight and head to the wind - call your representatives and tell them we need more energy of all kinds right now - not when the country in in the dumper.

Keep the faith, the battle is joined!


Higher Food Prices May Be Here to Stay*
By PATRICK BARTA April 14, 2008 WSJ

For all the economists and consumers who hope high food prices are temporary, here's one reason why they probably won't be: Farm costs are skyrocketing, making permanently higher prices essential for farmers to keep expanding production. Inflation is biting farmers world-wide.

In New Zealand, farm wages are up as much as 20% this year, and the average price of a dairy cow has jumped to more than $1,900 -- almost double last year's average of about $1,000. In Thailand and Indonesia, farmers are complaining about sharp increases in the price of fertilizer and diesel fuel.

In the American Midwest, land prices have jumped, along with the cost of energy and chemicals. The price of diammonium phosphate, a common fertilizer, is about $1,200 a ton in the U.S., up from about $450 a ton a year ago."Diesel, fertilizer, insecticide, grass-killing chemicals, they're all going up -- just like a shadow," says Samear Ruengrit, a 57-year-old farmer who grows rice about 45 minutes north of Bangkok. His average costs are now about 50% higher than last season, he says.

Farming costs are climbing for several reasons. Higher fuel prices make it more expensive to run tractors and other equipment, while pricier natural gas -- needed to make some fertilizers -- has also played a role. Equipment prices are rising because of strong demand for farm machinery in China and other developing countries, along with rising costs for raw materials like steel.

Wages are up in some parts of the world because many farms are expanding to meet higher demand, putting pressure on labor supplies, especially in countries like Australia where many workers are already occupied in commodity-based trades like mining. Cost pressures have intensified over the past six months.

Many farm suppliers and equipment dealers held back on price increases in 2006 and 2007, despite their own higher energy and labor costs. Now, after a year or more of strong markets for corn and other crops, those suppliers are deciding farmers can afford to pay more -- and they are passing costs along.

Many farmers were able to postpone cost increases through hedging or by buying fertilizer, chemicals and other supplies in bulk in 2006 or 2007, when they were cheaper. Now those strategies are hitting their limit as the stockpiles run down. The higher costs are transforming the economics of agriculture. Since some of the heftier outlays -- like those for fuel -- are expected to persist, farmers will need to command higher prices for their crops than they did a few years ago to maintain their profit margins.

For consumers, all this means continuing pain from high-food costs, at least for the foreseeable future. Rice prices have more than doubled since the beginning of 2008, causing some farmers to hoard their crops in hopes of further windfalls, pushing prices even higher. Food-inflation protests have rippled across the developing world, including Haiti, Mexico, Indonesia, Egypt and Pakistan.

A similar cost spiral has played out in other commodities markets, notably those for minerals. Rising costs "are sweeping across the commodities complex, and agriculture can't escape it," says Michael Lewis, global head of commodities research at Deutsche Bank in London. The upshot, he says, is "a complete structural shift" in agricultural prices to a new, higher level. None of this means food prices can't fall somewhat from current levels -- indeed, many economists believe they will, as the world economy slows and new farms come into production. If the U.S. slides into a deep economic malaise that triggers a world-wide recession, prices of most commodities probably would fall.

Even so, economists say the magnitude of the recent cost increases suggests it will be hard for farm prices to return to their lower levels of the late 1990s and early 2000s, amid a financial crisis in Asia and a recession in the U.S. Indeed, consider what happened in the mid-1980s, when crop prices collapsed following a sharp run-up in the 1970s. Corn fell to less than $1.60 a bushel in 1986 from a high of more than $3 a bushel a few years earlier. But within about two years, corn and wheat prices rebounded. Corn settled above $2.25 a bushel for much of the next decade, well above its price of less than $1.25 before the 1970s farm boom began -- the same kind of long-term upward shift in prices many economists expect today.

The problem for many farmers back then was that costs also stayed high, eating into profit margins and forcing many out of business.That merely underscores how dangerous high costs can be for farmers. Added costs often take a while to materialize during the early years of a farm boom, allowing growers to cash in on big profits during the early stages -- much as they have over the past two years. But they also tend to stick around for a long time, even after some of the forces that drove crop prices higher have faded. That exposes farmers to significant risks as farm booms mature.

Farmers are "terrified" of high costs if crop prices ease back, says Michael Swanson, an agricultural economist at Wells Fargo & Co. in Minneapolis. Such fears could make them reluctant to expand production as much as they might do otherwise. That would mean more constraints on food supplies -- and even higher prices.