I hope you’ve been taking the advice of my friends Kevin Raymond and Marc Charles lately. They’ve been right on the money when it comes to making money. Kevin writes Freedom By Friday and he has been spot on about commodities. They’ve been rising in price steadily over the past several months. Financially they have been a great place to make money.
I hate to be the bearer of bad news, but some of those same money making commodities are about to cost you. Anyone who’s been to the supermarket lately will know what I’m talking about.
A Dollar and a Dream
“A dollar and a dream”… This was the famous ad slogan for the NY lottery several years back.
The lottery is a brilliant business. Your chances of winning are virtually zero. But hey… It’s only a buck!
Well what if you could get hundreds, thousands, or even a million people to give you one lousy dollar just like the lottery? That’s exactly what’s happening here:
**End Sponsored Content**
It’s not just Americans who are feeling the pinch. Every country around the world has experienced increasing food prices since mid to late 2010. The inflation of food was even sighted as a reason for the protests in Egypt which caused President Mubarak to step down from office. Between October 2010 and January 2011 the food price index rose by 15%. We are only 3% below the 2008 peak when we experienced worldwide famine and food shortage.
In the coming months it is predicted to only get worse. Globally we will continue to see the price of food rise. In the last six months prices have risen considerably for wheat, corn, sugar, coffee, and cooking oil. It is forecasted that meat, eggs, fruits, vegetables, sweets, cereals and baked goods will experience food inflation as well.
Why is this happening?
It doesn’t take a genius to figure out that the weather is a big contributing factor to these price increases. Droughts and floods all over the world have helped to push up costs of several commodities.
Wheat has been especially hard hit this past year. The price of wheat has nearly doubled since last summer.
Australia’s deadly floods and excessive rain have compromised the quality and amount the country has produced this year. Most of Russia’s wheat crops have been incinerated by large scale wildfires. Each of which has lessened the global supply of wheat.
On the demand side, China is the world’s largest wheat producer. It has experienced record breaking drought over the past several months that threaten to ruin its wheat crops. China consumes nearly all of what it grows. The prospect of a failed crop would mean that China will need to import the commodity, stressing global supply and sending already inflated prices even higher.
Sugar prices have risen by 73% since June of 2010. Flooding has impacted crops in Brazil, Pakistan, Australia and central Europe. This in turn has reduced the global supply of sugar and caused the run up in price.
Weather isn’t the only contributing factor to higher food prices. Higher than expected demand for corn is helping to drive up its price. As the price of oil pushes higher, the popularity of ethanol based fuel gains popularity. Corn is the main ingredient in ethanol. The ethanol industry’s orders have risen eight percent this year alone.
This is especially bad because the price of corn affects other food products we buy at the supermarket and in restaurants. It’s used to feed livestock that line the meat department’s shelves, it’s an ingredient in many processed foods that line our frozen food’s section and once turned into corn syrup it sweetens many of our soft drinks.
The price of corn has doubled in the last six months and unfortunately analysts only expect the price to push higher in the coming months.
When will we feel the effects?
While we are already noticing some higher prices you should expect to feel more of an impact within the next six months. Higher prices for chicken and eggs will be one of the first things you notice because the bird’s life span is so short that higher priced feed gets factored in quickly.
Major food makers and some restaurants have already said they’ll be raising their prices this year.
McDonald’s is predicting it will have to raise prices this year to cover its increased food costs.
The Sara Lee Corporation has raised the prices on some of their goods already. They have publically stated they will continue to raise prices as they deal with higher commodity costs.
Kellogg Company plans to raise prices by 3-4% on all of its cereals.
Folgers and Dunkin Donuts coffee will be about 10% more expensive shortly and is set for its third price increase this year.
Tyson Foods is fighting a price increase of their products. Instead they are opting to cut $200 million in operational costs to offset their increased production costs. Hopefully it works, if not expect higher prices on the many items it sells in supermarkets.
How to combat these higher prices.
I’d love to tell you that the end is near but unfortunately I can’t. Higher food prices are here to stay and will be getting steadily worse. Over the course of your next few shopping trips I suggest you tweak your buying habits to help stretch your dollar a little bit further in your food budget.
One thing I’d suggest is try to avoid processed foods. I mentioned these were one of the categories we were going to see price hikes in. Ready-made meals are already sold to you at a premium because you are paying for convenience. Instead of buying a pint of potato salad, buy the ingredients and prepare the meal yourself. The same concept applies to frozen entrees, pre-cut vegetables and baked goods.
It also makes sense to buy in bulk whenever possible. Pay attention to prices and when you notice an item on sale pick up more of it or buy the family sized portion. Stock up when you can to stretch that dollar.
The best money saving advice I can give you today is to start frequenting your local farmers markets. These supply locally grown or produced food. These establishments won’t see as big of a run up in price and may be cheaper than your local grocery store.
Cash is King Right?
Do you need cash now, quickly, easily and ethically? Sure you do, that’s what we’ve all been looking for. However, it seems like we run into the same problems…There is either not enough time in the day, lack of know-how or simply do not have any products to sell.
Am I right?
That’s why I’m sending you this urgent bulletin…
**End Sponsored Content**
Keeping Money In Your Pocket,