Apr 25, 2010

Pay Attention to Agriculture!

The AG community is becoming more and more alarmed at the potential impact of Cap and Trade on not only the COST of food, but also its AVAILABILITY!

Food prices jumped by 2.4 percent in March, the most since January 1984. Vegetable prices soared by more than 49 percent, the most in 15 years. Gasoline prices rose 2.1 percent, the department said, the fifth rise in six months.
In the past year, wholesale prices are up 6 percent, with much of that increase driven by higher oil prices.

NO ONE in the news media, Fox News included, is talking about this!

The "Indirect Land Use" provision of the house-passed Cap and Trade bill will, by itself, transform up to 59 million acres of cropland back into forest. This is about 14.5% of US cropland, according to the USDA. This will reduce crop acreage and increase food prices. And that's just a small part of the bill!

As progressives intentionally increase the cost of oil-based fuel, it will have potentially devastating impacts on food prices and food production. One of the leading agriculture analysts in the country said that the US will be "transformed" from the world's largest exporter of ag products into a net food IMPORTER! That's amazing, because for generations, America has been the breadbasket to the world.

The average American farm is about 10 times more productive than the farms throughout the rest of the world. The main reason for this is cheap, abundant availability of crude oil. Farm machinery runs mostly on diesel fuel. If that fuel is too costly -- or UNAVAILABLE -- then food production would plummet and we could see shortages, rationing, or worse! Imagine the civil unrest if that were to occur!

Nearly 90% of American farms are still owned by families. If they couldn't get -- or couldn't afford -- to buy fuel for farm tractors and combines, food production would be devastated in a single season. Farm machinery tills the soil, plants the seeds, fertilizes the plants, and harvests the product. Machinery produces hay and feeds livestock. As the prices of these commodities rise, or their availability is curtailed, the price of food is directly affected. It's possible that we could see for even the 'availability' of food to be affected.

It seems unimaginable that we could ever see a famine in North America. But people need to know that the potential is there if energy costs skyrocket or there are shortages. Americans have no idea how dependent they are on cheap food prices and the cheap, abundant energy that makes that food supply available!

4/26 In the NEWS Today:
Some of the startling food price increases on a year-over-year basis include, fresh and dry vegetables up 56.1%, fresh fruits and melons up 28.8%, eggs for fresh use up 33.6%, pork up 19.1%, beef and veal up 10.7% and dairy products up 9.7%. On October 30th, 2009, NIA predicted that inflation would appear next in food and agriculture, but we never anticipated that it would spiral so far out of control this quickly...


  1. Good and prudent post. I would only add that the rising cost in diesel fuel also affects the price of food in the delivery of it from farm to store shelves.

  2. Thanks Chris...the transportation and delivery of farm product has always been the "given" and many people believe this is the only reason for added costs when things go up at the grocery. But this post was more to the probability of the reason for less or no production and a real squeeze in supply and demand....then consider the VAT they want to impose. Crazy! Producers are just going to sit idle rather than take a hit or take out huge operating loans and assume all the risk that the dollar will devalue.

  3. Oh I understand as that is the reason I say prudent. It is just I meet many individuals who besides not knowing a thing of what your post is about are also clueless as to the transportation costs built into cost they pay at point of purchase.

    These are the same people who demonize and wish to tax the hell out of business yet have no idea the taxes are actually on them.

    As you state and I agree whole heartedly a VAT would be devasting to the economy and I would add the final nail in the casket.


Thanks for taking the time to comment!