Food or Fuel?
Published: 15 April 2011
It’s said that many people worldwide eat on less than $2.50 each day, and that is hard to believe for someone living in America, where even a milkshake or a beer costs that much. Unless they have a year round garden in their backyard, no one in America could live on that radical diet. I’m not saying some of us don’t need to for a while, but we do live pretty well here in the land of the free.
Someone once said: “I have enough money to live the rest of my life, unless I have to buy something.” Well, we know how that goes, and the old saying that we wish we had an oil well is now matched by: “I wish I had a silo full of corn or wheat.” Food and fuel – they’re both commodities that, these days, are running parallel in rising costs and are affecting everyone from those who live on $2.50 a day to the average American for whom it takes much more.
“We live in a global market” is a well-used phrase that is common knowledge to us these days – we watch the international news and weather as much as the local or national news and weather, to find out what is happening and what could affect commodity markets. We’re finding that one of the largest changes is the growing middle class population in places like China, India, Russia and many other countries who can now afford beef, lamb and pork now and then, instead of a duck or chicken. Even after we make adjustments for inflation, both foodstuffs and fuel are spiraling out of control, and that is really tough on those for whom the difference between eating and starving is a fine line.
The planets are lined up with the reasons why fuel and food are rising: growing global middle class demand, weather, inflation, unrest in the Middle East and here in America the falling dollar. The fallen dollar makes it easier to sell our meat and grains overseas, but it also causes the price of oil to skyrocket, so what do we want?
Being producers, we have to have high prices for our products or we’re hurting. I’m not sure where the happy medium is, but I would be satisfied with a reasonably high market that is stable through the years. Some like the thrill of “rollin’ the dice,” but that gets old for others.
Global output of corn, wheat and rice is down about 1.4 percent, and the experts say global demand will rise 1.8 percent, and that will push global grain stockpiles six percent lower. You decide if that’s good or bad for your business.
Americans spend around seven percent of their disposable income on food, and that’s expected to rise to near 13 percent. America will have enough food, but, as wages remain flat, that money will be harder to spend. I’ve heard that in West Africa food prices have risen more than 50 percent, up to 300 percent, and food is running out.
Ag producers are just like the people in towns and cities, except they have bigger back yards where they can grow their own food.