Wednesday, August 15, 2007

Milk, Corn & Gasoline

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As Wall Street wheezes, jumps and sputters (and the housing market deconstructs) American consumers are facing sharply higher prices for foods they can't do without. This little-known fact may go a long way to explaining why, despite healthy job statistics, Americans are glum about the economy.

The Bureau of Labor Statistics said in its July inflation report that egg prices are 33.7 percent higher than they were in July 2006. Over the same period, according to the department's consumer price index, whole milk was up 21.1 percent; fresh chicken 8.4 percent; navel oranges 13.6 percent; apples 8.7 percent. Dried beans were up 11.5 percent, and white bread just missed double-digit growth, rising by 8.8 percent.

These numbers get lost in the broader inflation rate for all goods and services, which measured 2.4 percent for the same 12-month period. Across the economy, rising food prices were offset by falling prices for things bought at the mall: computers, cameras, clothing and shoes.

The price of a can of Carnation Evaporated Milk has gone up in regular increments - from 99 cents (Price Chopper Supermarkets) to $1.09, then $1.29, then $1.49 - that's as of last week - God knows how much it is today!

THANKS TO GENERAL MOTORS and the way it forced the gasoline engine on America during the 1930s and 1940s (imagine how far electric cars would have come had the technology been allowed to grow and develop) - the AUTOMOBILE (SUV - that thing in your driveway you can't afford to keep full of fuel, let alone make the monthly payments on) is behind the escalating food prices!!! WHY? Iowa State University's Center for Agricultural and Rural Development shocked the farm sector earlier this summer with a report that corn farmers are expected to lock in prices at or above $4 a bushel through 2010, about double what corn fetched two years ago.

To make more milk, or raise more chickens that lay more eggs, farmers need feed corn and other feed products. But corn prices have soared over the past year as Congress pushes ethanol, a gasoline additive made from corn. Fresh ears of corn are selling at record prices at the local supermarket!

The clamor for more ethanol has deeply reduced the amount of corn available for animal feed. Fields that previously grew soybeans are now yielding corn, and that's driven up the price of soybeans as they become scarce.

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