Food Price Inflation, Job Loss, & the National Debt

More stores closing, more jobs lost:

The Gap plans on closing 189 locations or 21% of its namesake stores (Old Navy and Banana Republic) by the end of 2013 but plans to open more stores in China (from 15 by end of the year to 45 by end of next year).

Discount retailer Syms and its subsidiary Filene's Basement have filed for bankruptcy protection and plan to close all 46 of their stores.

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1 in 15 people in America now living in poverty.

44 million + (15%)  Americans are benefiting from Food Stamp (Supplemental Nutrition Assurance Program) program. The program is facing possible cuts as policymakers search for new ways to curb the rising cost.

National debt is closing in on the $15 Trillion mark. 

 

 From Treasury Direct

Food price inflation:

The price of food is expected to increase 3.5 to 4.5 percent this year overall

With Halloween over, the nation’s thoughts turn now to Thanksgiving.  This most American of holidays is a cornucopia of culinary delights -turkey and dressing; mashed potatoes and gravy; cranberry sauce and all the other traditional Thanksgiving dishes which are at the heart of this celebration.

One of the greatest aspects of life in this country is the fact that overall, we as Americans enjoy a true abundance of food. According to the U.S. Census Bureau, this year U.S. farmers are expected to produce 750 million pounds of cranberries, along with 2.4 billion pounds of sweet potatoes, 1.1 billion pounds of pumpkins and more than 2 billion bushels of wheat, the essential ingredient for bread, rolls and pie crust. The typical American consumes 13.3 pounds of turkey each year, with no doubt a hearty helping eaten at Thanksgiving time.  As you may have noticed if you have visited the grocery store recently, prices for all this abundance have been on the rise. Thus, the question is: how much more will the Thanksgiving feast cost us this year?

Price inflation is measured by the changes in the Consumer Price Index (CPI).  The CPI is a measure of the level of average prices paid by urban consumers for a defined market basket of goods and services, including food.  The CPI for “food at home” is a component of the full CPI and is the principal indicator of changes in retail food prices. Thus, the CPI for food consumed at home and its changes are an accurate measure of price inflation for food items.

The 6.3% rise in “food at home” prices over the year has been much higher than the 3.9% increase in overall prices.  Food commodities such as soybeans, corn and wheat, along with energy prices, have increased over the past year. These increases, combined with a weak U.S. dollar, have caused most of the grocery store price increases which have been observed in 2011.  Several key ingredients for the Thanksgiving feast have risen substantially over the past year, including turkey, which is up 7 percent to an average of $1.68 a pound.  So, that 10-pound turkey, which cost $15.66 last year, is going to set you back $16.80 this year.  Other food items with above average price increases include: white potatoes, up 23%, dairy products, up 10.2%, fats and oils, up 11.3% and fruits and vegetables, up 6.7%.  Thanksgiving dinner is still going to be well within the reach of most American families, but it is going to be more expensive this year.

Why the Food Market Will Be the Next To Burst

Private investment firms are betting on hunger, and their reasoning, unfortunately, is sound.

Residential real estate may be slumping, but ag land is booming. In Iowa, farmland prices have never been higher, having increased a whopping 34 percent in the past year, according to The Des Moines Register. The boom is driven in part by agribusiness expansion, but also by a new player in the agriculture game: private investment firms. Both are bidding up land values for the same reason: the price of food.

They're betting on hunger, and their reasoning, unfortunately, is sound. This is bad news for would-be small farmers who can't afford land, and much worse news for the world's hungriest people, who already spend 80 percent of their income on food.

Thanks to the world's growing population of eaters and the fixed amount of land suitable for growing food to feed them, supply and demand tilts the long term forecast toward higher prices. More immediate concerns -- like increasing demand for grain-intensive meat and the rise of the corn-hungry ethanol industry -- have fanned the flames of a speculative run-up in agricultural commodities like corn, wheat, and soy. Add cheap money to the mix in the form of low interest rates, along with an army of traders chasing the next bubble, and you've got a bidding war waiting to happen.

The Commodity Futures Modernization Act of 2000 allowed the bidding to begin by allowing the trade of food commodities without limits, disclosure requirements, or regulatory oversight. The Act also permitted derivatives contracts whereby neither party was hedging against a pre-existing risk; i.e. where both buyer and seller were speculating on paper, and neither party had any intention of ever physically acquiring the commodity in question.

Agricultural commodities markets were created so that traders of food could hedge their positions against big swings in prices. If you're sitting on a warehouse full of corn, it's worth making a significant bet that the price will go down, just in case it does, and makes your corn worthless. That way at least you make money on the bet. Derivatives can add leverage to your bet, so you don't need to bet the entire value of your corn in order to protect it.  

Derivatives, it turns out, are also really cool if you want to make a ton of money by betting just a little. And if you can bet a lot, even better, as long as you keep winning. The golden years of commodities trading lasted from 2002 to 2008, when prices moved steadily, but not manically, upward. Then they crashed. And then they rose even higher than before. This is the kind of volatility, except worse, that commodities trading was created to prevent.

UN Special Rapporteur on the Right to Food Olivier De Schutter recently released a "Briefing Note" titled, "Food Commodities Speculation and Food Price Crises."

As he sees it, "Beginning at the end of 2001, food commodities derivatives markets, and commodities indexes in particular began to see an influx of non-traditional investors, such as pension funds, hedge funds, sovereign wealth funds, and large banks. The reason for this was simply because other markets dried up one by one: the dotcoms vanished at the end of 2001, the stock market soon after, and the U.S. housing market in August 2007. As each bubble burst, these large institutional investors moved into other markets, each traditionally considered more stable than the last."

In those years, the market value of agriculture commodities derivatives grew from three quarters of a trillion in 2002 to more than $7.5 trillion in 2007, while the percentage of speculators among agriculture commodities traders grew from 15 to 60 percent. The total number of commodities derivatives traded globally increased more than five-fold between 2002 and 2008.

The rush of speculators into agricultural commodities created something like a virtual food grab. While a traditional speculator might drive up the price of a commodity by physically hoarding it, now speculators, fund managers, sovereign nations, and anyone else with the money can do the same by hoarding futures contracts for food commodities, but with no expectation that they will have to physically deal with actual commodities. No messing with deliveries, maintaining warehouses, trapping mice, or other reality-based headache unless they happen to truly want the commodity.

Americans may not be starving, but we are feeling the pinch, paying upwards of a dollar for an ear of sweet corn at farmers markets, while in the southwest, dried corn chicos, a local delicacy, have doubled in price. In D.C., a group of livestock producers addressed the House Agriculture Committee last week, seeking the elimination of federal mandates for ethanol use in gasoline. The meat makers blame high corn prices on the biofuels industry.

If this was just about corn, I would say let the cows and cars fight over it. They can have it. After all, whatever corn doesn't get converted to chicken feed and gasoline probably isn't going to be made into chicos anyway. It's going to be made into corn syrup for the young and the obese.

But the commodities markets of the world are connected, running together in a herd, which makes this about a lot more than corn. It is likely that increased demand for meat and the rise of ethanol were indeed a trigger in rising corn prices, De Schutter says, dragging the rest of the grain markets into the bubble. But it was deregulation that opened the doors to betting on hunger.

A logical place to start calming food prices would be to un-deregulate them. And there's hope of that happening. The United States, by far the biggest player on the commodities stage, just made a step in that direction with the passage of the recent Dodd-Frank Wall Street Reform and Consumer Protection Act. The Act puts size limits on individual holdings, including agriculture commodities and derivatives.

Unfortunately, given the global nature of capital, even if the U.S. were to completely shut down speculation, it would just move offshore. International regulation is what's needed, and since the U.S. opened this Pandora's box of speculative horrors with deregulation, we have the moral responsibility, not to mention the political firepower, to shut it. With financial regulators underfunded and understandably distracted, a strong show of public support could help get their attention. But if our biggest inconvenience is higher prices for meat and sweet corn, that public display might be hard to come by. Especially if our retirement portfolio, wisely diversified with commodity index funds and ag land holdings from Iowa to Ethiopia, is growing.

[Source: Alternet]

Wonder food made of algae used to fight malnutrition

A nutritious blue-green algae, known as spirulina, has been added to school meals in Jordan to combat chronic malnutrition and anemia among children.
Almost one in ten Jordanian children suffer from chronic malnutrition, or long-term protein or energy deficiency, while a third are anaemic, according to a survey by the Jordanian Department of Statistics (DOS) made public in March.

The Intergovernmental Institution for the use of Micro-algae Spirulina against Malnutrition (IIMSAM), which has observer status with the UN Economic and Social Council, says spirulina is rich in protein and vitamin B, and contains beta-carotene that can overcome eye problems caused by Vitamin A deficiency. A tablespoon a day can eliminate iron anaemia, the most common mineral deficiency.

According to IIMSAM, a pilot feeding programme in two Kenyan schools from April 2009 to April 2010 helped cure 1,350 pupils suffering from malnutrition. The World Food Programme estimates that 22 per cent  of children under the age of five in Kenya are malnourished, significantly higher than the 15 per cent level which the World Health Organization uses as a threshold to describe an emergency situation.

Naseer S. Homoud, director of IIMSAM's Middle East Office, said spirulina has a role in fighting malnourishment, especially in children, and referred to "its low cost of farming as it can be grown even on infertile land and without a large water supply."

"Climatic changes are affecting our traditional ways of producing food — we had to find unconventional sources of nutrition," Jordan's minister of agriculture Mazen Khasawneh said. But he would not comment on the spirulina trial. "It is still too early to know if it is a successful experiment or not," he said.

First indications are that children at the early stages of primary education don't take to school meals with added spirulina. Pupil Khaled Sarhan said that, at first, he did not like the taste of school biscuits containing spirulina, but "after my teacher told me how useful it is, I got used to the taste after two or three days."
"Spirulina's bitter taste will be the main problem in spreading its use among children," Ahmed Khorshed, professor of food industries at Egypt's Agricultural Research Centre said, "but adding it to other food, like biscuits, could solve the taste problem partially."

The project will report to the minister of agriculture by June 2011. If successful, spirulina meals will be expanded and could be rolled out elsewhere in the Middle East.
"Egypt will be our next stop," IIMSAM director-general, Remigio Maradona, said.

- Hazem Badr
[Source SciDev]

Future outlook for food supply

Several items in Forbes‘ Special Report, “2020: What Happens Next,” caught my eye, all related  to the future of our food systems. Surely in North America we can always count on access to good food, right?

By now you’ve likely read about the delicacy of the just-in-time system we’ve created over the past several decades. It is a brilliant system from an operational perspective, but relies on inexpensive oil as well as instantaneous communications. When one or both of those are interrupted, like during a natural disaster, the weakness of the JIT system is exposed. When we’re talking about food, any interruption to the 3000-mile Caesar Salad has immediate and dire consequences.

Look at the numbers: American grocery shelves only have three days of food available at any given time, and American citizens only have five days of food stored in their homes. Not good. This is a scenario crying out for resiliency to be built into it so we can better withstand shocks to the system.

But if we look beyond emergency preparedness to the everyday business of creating and distributing food, we find an interesting solution in Oregon, a Portland-based company called Food Hub. Food Hub connects regional and local (not national or international) buyers and sellers of produce. Buyers includ large-scale professionals at grocery chains, independent restaurant owners, and you and me, buying for our home grocery needs. Food Hub has created an online marketplace that leads to offline face-to-face relationships with both large and small scale farmers. It even includes those of us with pea patches in our backyards (this modern victory garden is tended by a Seattle area CFO).

The Forbes 2020 team of experts and authors predicts that by the year 2018, 20% of all food consumed in U.S. cities will come from rooftop and parking lot farms. Read that again: 20% of all food in the US. That is an enormous number. In addition to making our cities more resilient, the health benefits, for both our bodies and our planet, of consuming food that is grown within a small number of miles of our homes or work places, are significant. Keep reading through the 2020 report and you’ll find food security noted in several other sections, ranging from phytomorphic machines due in 2013 to Chinese water wars predicted in 2020 (for drinking and crop irrigation). For a present-day look at water wars, look no further than our own western states; the American dust bowl is back.

Who will be the winners and losers as this trend continues? Outfits like Food Hub will win as the über-networkers are looked to by both buyers and sellers in the food equation. We’re seeing organizations like Whole Foods Market dedicate more of their valuable shelf space to produce that is measured in the tens (not thousands) of miles. We’re seeing Safeway and Albertsons busted by the Wall Street Journal for trying to fake it. As U.S. citizens begin to opt out of the food system en masse, garden supply companies like Peaceful Valley are also in position to benefit.

Where do you think you will you get your food from in the future?

The Future of Food Documentary

[Source Forbes]

Discovering the Doomsday Vault

Have you ever heard of the Doomsday Vault? I haven't until recently. It's actually called the Svalbard Global Seed Vault  and it's been open since February 26, 2008. It's purpose? "To serve as the ultimate safety net for one of the world's most important natural resources."

From the site:

The Seed Vault is an answer to a call from the international community to provide the best possible assurance of safety for the world’s crop diversity, and in fact the idea for such a facility dates back to the 1980s. However, it was only with the coming into force of the International Treaty on Plant Genetic Resources for Food and Agriculture, and with it an agreed international legal framework for conserving and accessing crop diversity, that the Vault became a practical possibility.

The Vault is dug into a mountainside near the village of Longyearbyen, Svalbard. Svalbard is a group of islands nearly a thousand kilometres north of mainland Norway. Remote by any standards, Svalbard’s airport is in fact the northernmost point in the world to be serviced by scheduled flights – usually one lands a day. For nearly four months a year the islands are enveloped in total darkness. Permafrost and thick rock ensure that, even without electricity, the samples remain frozen.

Global food supply in jeopardy?

Rural voters who elected our independent politicians will surely be hoping they can get food onto our national agenda. The issue of human traffic may remain an election staple, but it is the movement of food around the world that is destroying the livelihoods of farmers in Australia and overseas.

Globally, small producers endure economic policies that pit them against the whims of consumers and profit-hoarding transnational corporations including Monsanto.

Last week the US-based Monsanto secured a 20 per cent minority interest in Western Australia's InterGrain and launched an advocacy and "education" campaign to promote the benefits of genetic modification to consumers. This move will continue Australia's integration into global circuits of food capital at the expense of small farmers, and escalate our ecological debt.

Per Pinstrup-Anderson, Cornell's professor of food nutrition and public policy, believes the world is not headed for a "global food apocalypse". There is an overabundance of food in the world - look at our growing waistlines. But the reality is millions of people die from hunger and malnutrition every year and unsustainable farming practices are destroying arable land.

Governments and policymakers need the political will to defend their citizens against short-sighted and unjust trade policies that favour agribusiness and treat food as just another commodity. Consumers need to care about where their food comes from and who produces it, and eat according to seasonal rhythms. It wasn't long ago that cherries heralded the approach of Christmas. Today, we can have our stone fruit 365 days a year, with little thought to the unjust trade policies that bring them to our table.

The global food crisis has implications far beyond hunger. In Chile, Latin America's "economic miracle", seasonal workers suffer health problems through pesticide use associated with the intensive agriculture that drives the country's burgeoning fresh fruit and vegetable export market.

Under the North American Free Trade Agreement (NAFTA), Mexicans face growing obesity as cheap white corn floods across the border from the US and Canada, forcing smallholder farmers to abandon traditional varieties. In Spain, EU policies that deregulate milk production are driving dairy farmers off the land while plans to close local abattoirs threaten thousands of local jobs and increase the pain and suffering of livestock.

Here in Australia soaring water prices and a rush for arable land by international investors threatens the future of family farmers in the Murray-Darling Basin. The global farmland grab, the result of private investment in agriculture, was triggered by the global food crisis.

Until consumers embrace community food systems, and regain their relationship with those who produce the food we eat, farmers will continue to lose their livelihoods and their sons and daughters will continue to seek more viable professions in the city.

The international people's movement La Via Campesina ('the peasant way') represents 300 million small farmers who are campaigning to replace the outdated concept of food security with that of food sovereignty. The movement promotes a return to agro-ecology that recognises the multifunctionality of food and will reduce the greenhouse emissions of the industrial food system.

Despite the approach of the long-stalled Doha Development talks, there has been little public debate regarding Australia's agricultural trade regime.

It is time for consumers, producers and politicians to explore the benefits of short supply chains that guarantee healthy, locally-grown food that returns a fair price to farmers without pillaging the environment. After all, as Bob Katter tells us, pineapple doesn't grow in a can.

[Source ABC net Alana Mann]

Human urine can be used as an effective fertilizer

Researchers say our liquid waste not only promotes plant growth as well as industrial mineral fertilizers, but also would save energy used on sewage treatment.

The beets Surendra Pradhan and Helvi Heinonen-Tanski grew were perfectly lovely: round and hefty; with their skin a rich burgundy; their flavor sweet and faintly earthy, like the dirt from which they came. Unless someone told you, you'd never know the beets were fertilized with human urine.

Pradhan and Heinonen-Tanski, environmental scientists at the University of Kuopio in Finland, grew the beets as an experiment in sustainable fertilization. They nourished the root vegetables with a combination of urine and wood ash, which they found worked as well as traditional mineral fertilizer.
"It is totally possible to use human urine as a fertilizer instead of industrial fertilizer," says Heinonen-Tanski, whose research group has also used urine to cultivate cucumbers, cabbage and tomatoes. Recycling urine as fertilizer could not only make agriculture and wastewater treatment more sustainable in industrialized countries, the researchers say, but also bolster food production and improve sanitation in developing countries.
Urine is chock full of nitrogen, potassium and phosphorus, which are the nutrients plants need to thrive—and the main ingredients in common mineral fertilizers. There is, of course, a steady supply of this man-made plant food: an adult on a typical Western diet urinates about 500 liters a year, enough to fill three standard bathtubs. And despite the gross-out potential, urine is practically sterile when it leaves the body, Heinonen-Tanski pointed out. Unlike feces, which can carry bacteria like salmonella and E. coli, urine poses no health risks—astronauts on the International Space Station even drink the stuff—after it's purified.

The nutrients in urine are also in just the right form for plants to drink them up, says Håkan Jönsson, a researcher at the Swedish University of Agricultural Sciences in Uppsala who was not involved in the beet study but has researched urine recycling for over 15 years. Food gives us nutrients like nitrogen as parts of complex organic molecules, but our digestive system strips them down into the basic mineral form that plants need—so "we have done half of the job," Jönsson says.
A small but dedicated contingent of organic gardeners in the U.S. and Europe already fertilize with urine at home, and researchers in Scandinavia have run pilot projects to recycle locally collected urine on small farms. But urine recycling may never become a part of large-scale farming in industrialized countries, because implementing it would mean drastically remodeling sewage systems in order to collect and transport liquid waste.

It would also mean swapping regular flush toilets for separating toilets, where a divided bowl and independent set of pipes separate urine from everything else. This detail is a roadblock, Jönsson says, because many people don't want a toilet that looks strange. "Acceptance is a big problem for this kind of system," he adds.
For the recent experiment with beets, the urine was obtained from specialized toilets in private homes. Heinonen-Tanski's group planted four plots of beets and treated one with mineral fertilizer, one with urine and wood ash, one solely with urine, and one with no fertilizer, as a control.
After 84 days, about 280 beets were harvested. The beetroots from the urine- and urine/ash–fertilized plants were found to be 10 percent and 27 percent larger by mass, respectively, than those grown in mineral fertilizer. By subjecting some of the beets to chemical analysis, the researchers determined that all of them had comparable nutrient contents—and according to a blind taste-testing panel, their beety taste was indistinguishable. The results were published in the February 10 issue of the Journal of Agricultural and Food Chemistry.

Effective fertilization is not the only benefit of recycling urine, Heinonen-Tanski suggested in a review paper in the January 2010 issue of Sustainability. The separating toilets that collect urine use less water than flush toilets, she wrote, and the simplified waste stream requires less energy in sewage treatment.
"Agricultural and health organizations should encourage people to use human urine as a fertilizer," Heinonen-Tanski concluded in the paper, especially in areas where wastewater treatment is unavailable or ineffective.
Though Jönsson is skeptical that micturition farming will ever happen on a large scale, his own family does practice urine fertilization: He and his wife use what they collect from their separating toilet to nourish their garden at home in Sweden. The urine that one person produces can fertilize about one square meter of soil a day, Jönsson said—but there's been less to go around since his three children left home.
"It's enough for the vegetables and the flowers," he said, "but I can only fertilize very lightly on the lawn. Otherwise I run out of urine."

[Source: Scientific American Maria Grunbaum]
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Side note: But wait!!! There's more! Since we're on the topic of urine - here's another post on things we can do with pee besides flush it down. I can see it now. Bumper sickers that say "This car runs on piss"