Tuesday, January 31, 2012

Beef Prices Soar....But You Already Knew That

The USDA reports beef prices went up 10% last year and will go up another 5% this year.  From the article:  "A drought across Texas and Oklahoma has made food and water scarce for cattle, which has kept herds small. The Department of Agriculture says there are 91 million cattle nationally, the smallest herd since 1952. Add to that the rising cost of feed and rising beef exports, and the price of beef in the states is surging."

Those of you who read my 2012 Outlook (which you can still receive for free by emailing me and requesting a copy) knew to expect stories like this.  Early this month, I wrote:

If 2011 reminded us of anything, it was the fact our agricultural sector remains susceptible to
changes in not only the weather but the financial markets as well. The recent collapse of MF
Global continues to send shock waves throughout the ag sector; we may not fully understand
the extent of it until later in the year.

Many of you may wonder why I would bother to provide insight into the agricultural sector.
Without going into a tremendous amount of detail here, we need to remember our growing
global population continues to tax our ability to produce enough food to feed us. While I don’t
subscribe to Malthusian economic theory, I do think it's fair to say we'll experience some
growing pains in our ability to feed ourselves in the coming years. Further, as discussed above,
inflation plays a key role in the price of food, which leaves less money to spend on other
necessities and niceties. And if you needed further proof, note that milk futures were one of
the best performing commodities in 2011.


Here’s the absolute minimum you need to know:
  • Agriculture will be a profitable investment in 2012. We should infer from that food prices won’t subside.
  • Global demand for food will remain strong, provided there are no significant disruptions to the global economy or geopolitical stability.
  • Devalued dollars continue to aid U.S. farm product exporters.
  • Unusual weather patterns may continue to put upward pressure on food prices.
(citations omitted).
I don't share this with you to say "I told you so" but rather to make a very simple but important point to all of you reading this: Anyone who is reading the news and paying attention can see what's happening to us. 
Friends, this isn't rocket science.  Just start reading the news...and not just about the local sports team or the new mall that's opening up down the street.  Start reading the stories that affect your every day life.  Stories about the economy, about what we're eating, about our rights being taken away from us by an overreaching government.  Start putting together your own file of articles, and then share them with friends.  Ask them for a simple favor: see if they will read the articles and tell you what their overall impressions of them are.  Do they reach the same conclusions as you?  If so, ask them, "what steps do you think we should be taking in response to our conclusions?"  This way, you are educating yourself and others, and you're encouraging others to prepare as well.

No comments:

Post a Comment