Tuesday, February 19, 2008

I love to say I told you so...

Wheat!!! I have been writing about the coming wheat shortage for 2 years. FINALLY, the USDA and Goldman Sachs are coming around to my way of thinking.

Here is a simple equation:  Grain to bio-fuels - farm land lost to deveopment + higher fertilizer costs + higher diesel costs + 75 million more people each year wanting (can you imagine) to eat = WHEAT SHORTAGES!!!!  Wanna see me do the same trick with corn?


``The supply shortage has been much more acute than what we had expected,'' said Ruifang Zhang, a commodities analyst at Goldman in London." (from the linked article) Really? What WERE you expecting? Just how many Iowa State University agriculture grads work at Goldman? My bet is a great many less than Ivy League liberal arts majors... but I digress.

You ain't seen nothing yet as that term applies to wheat, corn, soy beans, and rice. Prices are going much higher, so much so that this will become a major political issue - one that will make $8 gasoline seem trite.

You heard it here. In a few years you will hear it from Goldman Sachs.

Yours for a better world,


Mentatt (at) yahoo (d0t) com

2 comments:

Donal Lang said...

I've recently taken an interest in the 1950's for examples of production and consumption numbers, and other metrics, before cheap and plentiful oil became such a distortion in the basics of our global and local economy.
At that time the average family spent 30% of its income on food, compared to today at 15%. But food then was more local, seasonal and basic, today's food has a much higher 'fuel' input; production, processing and transportation.

Another interesting aspect is housing costs, which have doubled as a percentage of income (9% to 19%). If food costs more, then housing costs will have to fall to maintain long-term affordability.

Of course, the world population has more than doubled since 1950!

A Quaker in a Strange Land said...

Donal:

I have seen reports of higher historical costs and lower current food costs, but your point stands. Unfortunately, the problem with food will not be cost, it will be availability.