Been There Done That

Richard (Rick) Mills
Ahead of the Herd

Page 1 of 2

As a general rule, the most successful man in life is the man who has the best information

If you look at the many charts and read many of the articles being published today you couldn’t be faulted for thinking the rise in food prices is a fairly recent phenomena.

Commodity Food Price Index Monthly Price, indexmundi.com

The Food and Agriculture Organization (FAO) of the United Nations publishes the FAO Food Price Index, a measure of the monthly change in international prices of a basket of food commodities.

In 2002 FAO’s Food Price Index stood at 89.6, in May of 2014 it’s at 207.8. In 2002 meat was 89.9, dairy 80.9 and cereals 93.7. In May 2014 the three individual index’s stood at:

• Meat 189.1
• Dairy 238.9
• Cereals 204.4

The International Monetary Fund (IMF) recently published its Index of Primary Commodity Prices.

The reality is food has been soaring in price for decades. Look at this eye popping chart from the St. Louis Fed.

The next time you are in the supermarket play this game – compare today’s prices for the following items to 1970’s prices:

• Apples – .15lb
• Ham – $2.29lb
• Campbells Tomato Soup – .10
• Crest Toothpaste – .77
• Folgers Coffee – $1.90lb
• Turkey – .43lb
• Ground Round – .79lb
• Potatoes – .98 for 10lb
• Large Eggs – .59 dozen
• Pork Chops – .59lb
• Sliced bread – .16 loaf
• Sugar – .39 5lb
• Rump Roast – $1.69lb
• Bacon – $1.29lb

Experts and industry insiders often agree about some of the basic underlying causes of the recent jump in prices – drought, disease, climate change, loss of arable land and soaring input costs, such as diesel and fertilizers. It’s pretty obvious they all have an impact on the price of what eventually reach’s your supermarket shelves.

But most pundits don’t get it, fortunately we at ahead of the herd do – in the agricultural industry today, as it has been for the past 70 some years, it’s all about supply and demand.