Food-Price Spiral Dead Ahead

Take these Steps NOW to

Protect Yourself from Rising Grocery Costs

Food prices are on the rise this year… and are all but certain to continue rising. It’s an emerging trend that is just now starting to catch the attention of the mainstream media. Unfortunately, most of their reports underestimate the extent of the real threat to consumers’ budgets.

What is acknowledged officially (by the Bureau of Labor Statistics) is that food prices increased 0.4% in February – the biggest monthly rise since September 2011. The most dramatic increases are being seen in meat prices. Average retail cost for beef has risen at its sharpest pace since 1987 – and with U.S. cattle inventories at their lowest levels in decades, those costs are expected to continue rising. A recent forecast from the Department of Agriculture predicts that prices at the grocery store could rise by as much as 3.5% in 2014 (compared to a rise of just 0.9% last year).

Don’t Be Fooled by “Shrinkflation”
on the Grocery Aisles

These official numbers don’t fully account for a phenomenon that some have dubbed “shrinkflation” – the act of downsizing product portions without commensurate downsizing in price.

Regardless of whether you’re paying the same for less product or paying more for the same product, you’re getting less and less for your dollar at the grocery store.

The Department of Agriculture and most major grocery suppliers blame recent drought conditions. But America’s out of date water delivery infrastructure is only a small part of the story. Grocery price inflation has been ramping up due to rising input costs throughout the supply and delivery chains, which are now being exacerbated by Obamacare implementation.

This is all happening, in spite of the fact that spot prices for most major agricultural commodities have actually been on the decline since 2012. Only over the past three months have raw agriculture prices begun to climb, partially in response to weather conditions. Coffee futures are up a staggering 58% year to date.

The Dow Jones UBS Agriculture Index, which tracks a number of farm products including coffee, soybeans, cotton, sugar, corn, and wheat, is up and continuing to rise.

The recent breakout in the “Ags” could be the start of a major trend of rising costs for farmed commodities. If that does happen, it will further accelerate
the recent trend of rising grocery costs.

A Two-Pronged Approach: Stock Up on Food
and Own Food Stocks

How can you protect yourself from the coming surge in food inflation? The simplest (and most effective) way is to stock up on the non-perishable products you know you’re going to use. By buying additional quantities now for future consumption, you’ll stay a step ahead of rising costs. You’ll also be boosting your emergency preparedness.

Once you’ve implemented a personal food security and food inflation protection program that includes bulk quantities of long-lasting foods, plus emergencysurvival
food kits such as the Maximum Shelf Life 30-Day Comfort Food Reserve, you might explore ways to hedge against and profit from rising food prices as an investor. Here a couple of easily accessible ways to tilt your portfolio toward food:

  • The Market Vectors Agribusiness ETF (MOO) gives you exposure to 52 stocks from around the world related to agriculture, including producers of seeds, fertilizer, and farming equipment.
  • A less direct play on food is to invest in Brazil, which has the world’s largest freshwater supply and is becoming a global leader in agricultural development. Although volatile, the iShares MSCI Brazil (EWZ) trades at an attractive valuation and is recovering after Brazilian stockswere sold off last year and early this year.

Again, before you invest in any agriculture-related stocks – which cannot be guaranteed to deliver inflation-beating returns over any given period and cannot protect you in any practical way from potential food supply disruptions – be sure to invest first in your own personal food pantry.


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