YOUR WEB GUIDE TO EMERGENCY AND DISASTER PREPAREDNESS AND SURVIVAL

Food Costs Rising Precipitously

By James and Terry Hyde, R.N., B.S.N.

We’ve been warning that food and fuel prices were going to rise sharply, and the cows have come home to roost.

The increases at supermarkets may have seemed subtle to some, but you’ll be noticing that vegetables, in particular, now cost a good deal more than they did just a month ago—in some cases double what they fetched before.

Wintry weather impacted vegetable crops in the South, in particular Florida and Texas, sending prices sharply higher and making up 70% of the food price increases. Hardest hit were lettuce, peppers and tomatoes, all of which at least doubled in price.

And, because the cost rose for growing cattle feed—corn and soybeans—meat and dairy prices have taken the escalator, as well.

Middle East turmoil was bound to result in higher gas prices. Uncertainty about the oil supply always seems to make those numbers spin a lot faster at the pump.  It’s one market sector that’s really manipulated by speculators far more so than by supply and demand. According to AAA’s Daily Fuel Gauge, the average price is now at $3.55 a gallon, an increase of 42 cents over last month.

Adding to the economy’s woes, the Commerce Department is reporting that new housing units built last month fell off the cliff by almost 23%, resulting in the second worst drop ever and one that hasn’t been this bad since April of 2009.

As is usually the case when experts look at the same data, differing opinions have emerged over the price hikes. FoxNews.Com spoke to two who differ on what the future will hand us.

Believing that the economy will get paler over time, John Ryding, an economist at RDQ Economics, sees the upward trend continuing for the foreseeable future. Said he to Fox, “We do not buy the Fed’s reassurance that these pressures will be temporary and we believe the public, seeing these strong increases in food and energy … will not be marking back down their inflation expectations,” Ryding said.

David Resler, an economist at Nomura Securities, disagrees. He told Fox the increases in food and fuel prices are likely temporary. He concurs with the rosy remarks made by the Federal Reserve on Tuesday. “Vegetable prices should come down as production recovers,” he told Fox.

Of course that production would be helped tremendously if the Interior Department would stop worrying about some damn, obsolete minnow they just can’t seem to live without and turn the water back on in once fertile California valleys. Farm after farm after farm has closed in California so that little fish can be protected. Give me a break.

And, of course, turmoil in the Middle East is a major reason that motorists are facing higher gas prices, Resler says. “Both food and gasoline prices are going to stop rising so rapidly.” I love optimism, but nothing in the actual data indicates Resler is right.

As usual, it’s tough to tell who to believe at first blush, so let’s consider pockets of global chaos that will likely come together to cause an economic earthquake here.

Many electronics manufacturers in Japan are facing some serious issues with half of that country still covered in debris and the uncertainty posed by the Fukushima power plant.

Few electronics products manufactured here don’t have parts, components or raw materials, which are made in Japan. Sixty percent of the world’s supply of silicon, the basis of all computer chips, comes from Japan, where the manufacturing sector has largely shut down due either to damage to their plants or stoppages caused by rolling blackouts.

That will result in production delays that will shut down operations at some companies here. Bloomberg interviewed two experts who keep their fingers on the pulse of the electronics sector in Japan. They believe it may be two months or more before manufacturing in the land of the Rising Sun will be back up and running, and even then manufacturers will struggle to catch up with orders.

Spot prices, those paid by small manufacturers, will be on the rise under the law of supply and demand, while contract prices will remain the same, but there will be delays in delivery of components and silicon. That translates into higher prices for electronics, a sector where margins aren’t all that hefty to begin with.

It may be some time before our manufacturers will be able to get enough component supplies or raw materials with which to kick start manufacturing plants here. That will knock a good many people out of work until their employers get what they need to make their products. And, like dominoes, that will result in an uptick in the unemployment rate, albeit temporarily.

We’ve already written on what could happen if Japan decides to sell off nearly a trillion dollars in our Treasury notes (debt) to get the cash necessary to rebuild itself.

The Middle East is undergoing social, religious and Iranian-backed upheaval that’s starting to sputter, but if oil prices continue to rise, there are 6,000 products produced in this country that require oil in one form or another. Shortages mean higher prices.

Then there’s the battle in Congress, in which determined Republicans will get their spending cuts or the Democrats will be backpedaling fast come 2012 as they try to come up with some explanation about why they have to keep people on the government teat and refuse to make cuts.

Ditto for the states, where governors are trying to keep the Walker Movement alive.

All things considered, right now the economy is tenuous at best and tottering at worst. If any more market segments take a hit from Mother Nature or a “man made catastrophe,” as the PC crowd likes to call Islamic terrorists, we’re going to be in some real trouble.

And don’t forget that the Fed is printing funny money for the express purpose of buying our debt. If you don’t have something with which to back up that printed-paper, it’s not worth the ink printed on it.

Oddly enough, the disaster in Japan will push the yen past the dollar in value, enough so that the world could yank the dollar as the worldwide currency of exchange for such goods as oil. Why would the yen rise? They may well have to dump our debt—U.S. Treasuries—they’ve bought, to rebuild.

It’s a bleak picture, so when you hear government employee union members bitching about making higher contributions to their pensions and health care benefits, you might give them this article and tell them to consider what’s going on. The states can’t pick up their absurd tab any longer, and if we don’t start cutting government spending, it’s default time and that will push us out of the top spot on the global economic stage.

We all need to do some belt-tightening and utilize common sense. If we want our veggies to come down in price, all we need to do is get the Interior Department to cut the crap with that stupid minnow and turn the water back on to irrigate farms that have become dust bowls. Sometimes you have to sacrifice a minnow species for the salvation of the nation. Vegetables we can eat. Minnows we can’t so put them in a large fish tank and start irrigating those farms again.