Farmers aren't like those of us who make Wall Street our home. We cry and moan over every little setback. We yell about the latest Federal Reserve decision that we don't like. We gripe about the latest corporate earnings report gone wrong.
You'd think we run the country. And, I'm sure, that more than a few of us wish they were in charge.
Farmer's aren't like that. They won't tell you how everything is going to hell in a handbasket. They know, that no matter what, they are responsible for those few acres under their care. That come spring, life starts again, and they must plant for the next harvest.
If they can't plant corn, because fertilizer is too high, or seed isn't available, or any of the other myriad of things that can come their way. They just reply: I'm planting soybeans this year.
And that is the way it's going to be.
No recriminations. No cussing out the government, although that might be entirely appropriate. No blaming the other guy.
The farmer's prime objective right now: he's got to plant next year's crop.
And that's what makes our job, as economic observers, all the more difficult. What's really going on with our nation's food supplies right now?
I'm as anxious as you. I see the emptying shelves and the higher prices. And I wonder just where we're going with all this. I know too, the rising price of petroleum is hitting the farmers hard.
Not only does gas run their tractors. But petroleum is a principal component in the fertilizers and additives that farmers use to grow their crops. In fact, after water itself, petroleum and all its derivatives may be the single most important component to agricultural production.
So in an effort to delve into just what direction food is headed, I thought I'd pay a visit to the US Department of Agriculture. These are the people who should know, just what's going on out on the American Farms.
And good news, each year the USDA produces their projection for food supplies and prices. But as I dug into the latest report, produced at the end of last year. I found the results to be disappointing, to say the least.
As I'm seeing more and more often, many of these government reports simply rely on another Government agency to supply critical data, and then simply incorporate that into their report.
Let me give you an example. For the USDA, the report indicates that food prices should continue to climb in relationship to the project Consumer Price Index.
I could have made that kind of projection, and I'm no Ag Expert. How about the project cost of petroleum? Or the availability of seed? Or long-term weather forecasts?
Now, one of these days we'll have to discuss what I see as an increasing reliance on research within the various Federal Agencies, which simply relies on what the “guy down the hallway” has already said. Very little original research is going on within much of the economic data that we're seeing.
But I digress.
Today's topic is what does the food situation in the US looks like right now.
Unfortunately, in spite of what the USDA says, (or doesn't say) there are two things that we know for sure about food.
Number 1 the price of food is rising. In the latest report for 2021, the cost of food rose 6.3%. That's the highest food inflation, since back in 2008.
And as bad as food inflation was, its largest component: energy was seeing inflation at nearly four times that level.
The second thing we can observe about our food supplies, is they appear to be showing signs of shortage. Anecdotal reports are all over the internet, to say nothing of our local supermarket, showing empty shelves. Something we literally never saw, outside an occasional New England blizzard, or the Covid lockdown.
And frankly, that's all I need to know. I don't have to wait for the USDA to publish their next MACRO numbers, or the crop reports to come out next Spring.
I think I know enough to buy a little extra. To put away a bag of rice or oats in the basement, just in case.