Excerpted from Lee Bellinger, Publisher, Executive Bulletin
Ag Prices Rocket Upward 17 to 25%;
Food Riots Ahead?
I'm not kidding – let me spell out in some detail how dire this situation actually is, because I really want you to understand what's happening out there.Have you taken any person steps to build a vital layer of protection against the coming food inflation and even the potential for food riots?
Severe droughts – aggravated by antiquated water supply infrastructure – are hitting the United States, Russia, Ukraine, and Brazil. Food prices are soaring to near record highs – and the price increases show no signs of slowing.
Sure, rising prices are often disguised. For example, official inflation numbers don't take into account the growing practice of increasing food packaging relative to calories purchased – meaning food producers are trying to avoid raising their prices by providing smaller portions.
Yes, it's possible to protect your household from food inflation and to hedge yourself against spot shortages or runs on supermarkets.... here is why preparation is prudent, wise, and potentially life-saving...
The latest wave of price increases has prompted new warnings from major global organizations (including the UN and World Bank) confirming the likelihood of continued price inflation. Dr. Jim Yong Kim, President of the World Bank, described the latest wave of price hikes as "historic" urging countries do everything possible to prepare for further price inflation this fall.
These historic price increases are expected to continue throughout the fall, and have the capacity to become the norm, rather than isolated incidents. The New York Times recently reported that "international groups increasingly see inconsistent yields and drastic swings in food prices... as a global challenge that is not intermittent but here to stay."
The latest round of food price inflation that began this past summer is only the most recent event exposing an impending crisis far worse than government bureaucrats will admit: the world's food supply is extremely vulnerable to natural disasters and failed government policies.
The United Nations recently warned that a select few agricultural hotspots produce a significant portion of the world's food supply – almost literally like having all your eggs in one basket! This geographic concentration of agricultural production leaves the food supply chain defenseless against natural disasters. So far, the world has yet to experience a "perfect storm" of sorts for the food supply where the majority of the world's food producers are getting simultaneously hit with droughts and floods.
Unusual Volatility Triggers Global Alarm
However, with incidences of severe weather statistically increasing worldwide, food supply issues are expected to worsen in the coming months and years, as droughts and floods continue to hamper agricultural production. This was acknowledged by the World Bank earlier this month in a statement cautioning, "we can expect to see volatile, higher-than-average prices until at least 2015."
Spokesman Colin Roche agreed, "This is not some monthly wake-up call. It's the same global alarm that's been screaming at us since 2008. These new figures prove that the world's food system cannot cope on crumbling foundations. The combination of rising prices and expected low reserves means the world is facing a double danger."
Government bureaucrats have strong incentive to cover up the depth of this problem for one important reason: failed government policies are just as much to blame as floods and droughts.
The massive rise in the cost of corn over time is more attributable to the diversion of corn crops to the production of ethanol in order to meet governmental environmental targets, than it is to natural disasters. The World Bank reports that, "the use of corn to produce ethanol biofuel which represents 40% of U.S. corn production – was also a key factor in the sharp rise of U.S. maize price."
Higher energy prices resulting from increasingly strict environmental policies have also worked to the detriment of agriculture in the United States. Compounding the problem, many countries exacerbate the already dangerous issue with protectionist agricultural policies in response to rising food prices.
Following severe drought in Russia in 2010, the Russian government temporarily banned wheat exports to lower internal prices. This sent worldwide food prices significantly higher, intensifying worldwide food woes. Protectionist policies, detrimental to the global food supply, will likely increase as global food issues worsen.
Despite the gravity of the situation, many bureaucrats and pundits want you to believe that this problem will be prominent only in poorer, less-developed countries. While it is true that less developed countries experience worse food supply issues, the United States is far from invulnerable.
According to NPR, during the most recent food supply crisis, one in seven households in the United States were labeled as food insecure by the government, meaning they were unable to obtain enough food. This impact is most substantial in lower income households, but food supply problems of a similar magnitude have resulted in widespread social chaos in other parts of the world, despite only hitting poorer households.
An important-but-forgotten fact is that the Arab Spring protests that toppled numerous governments in the Middle East found their roots in high food prices, rather than a desire for democratic government. According to Egyptian resident and journalist John Bradley, "The main hope of those who poured into Tahrir Square was shared by the revolutionaries in Tunisia: that sudden and radical change would miraculously mean affordable food."
Now less than two years later, the world is experiencing a far worse food crisis, one that can be felt in the developed world, prompting CNN to already refer to 2013 as an "impending year of crisis."
Food Riots Coming to a Supercenter near You?
We are unlikely to see social chaos on the magnitude that overthrew governments in the Arab Spring. However, the prospect of social unrest in response to an insufficient or overpriced food supply is one we must be keenly aware of.
I see absolutely no reason to doubt that food riots could break out in the U.S. After all, some 45+ million food stamp recipients have been officially told that society owes them free food. Any type of modest reform to the food stamp program could result in food riots by those whose sense of entitlement spurs them to go to the supermarket and simply help themselves.
Roving flash mobs already invade shoe stores, fashion jeans retailers, as well as Wal-Mart, Walgreens, and 7-Eleven and simply grab what they want. Do you doubt that they'll do the same in supermarkets if their food stamp benefits are scaled back? [This recently took place in Spain where 3 tons of food were taken by a huge mob in one store - not shoes or TV's - FOOD!]
Thanks, Lee!
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