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Realistbear

Inflation In Food Prices About To Blast Off

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http://business.scotsman.com/index.cfm?id=1063102007

A recipe for disaster
DOUGLAS "JOCK" FRIEDLI
(dfriedli@scotlandonsunday.com)
For seven years, the market kept a lid on food inflation. That started changing about 18 months ago
....../
In the past month, manufacturers have been hit by a combination of raw materials price hikes -
flour up 50%
,
milk powder up 35%
and
soya ingredients up 40%
- which have come too quickly to be absorbed through efficiency improvements or small price rises.
For Walker, who runs a company employing 1,200, mostly in Scotland, there is worse to come. He has been told that the price of
butter will double over the coming year
. Butter makes up 60% of Walker's costs, so he must get his customers to accept price rises ahead of inflation or risk his firm's future.
....../

Not sure if such basics as food are in Gordon's Chinese Products Index?

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http://business.scotsman.com/index.cfm?id=1063102007
A recipe for disaster
DOUGLAS "JOCK" FRIEDLI
(dfriedli@scotlandonsunday.com)
For seven years, the market kept a lid on food inflation. That started changing about 18 months ago
....../
In the past month, manufacturers have been hit by a combination of raw materials price hikes -
flour up 50%
,
milk powder up 35%
and
soya ingredients up 40%
- which have come too quickly to be absorbed through efficiency improvements or small price rises.
For Walker, who runs a company employing 1,200, mostly in Scotland, there is worse to come. He has been told that the price of
butter will double over the coming year
. Butter makes up 60% of Walker's costs, so he must get his customers to accept price rises ahead of inflation or risk his firm's future.
....../

Not sure if such basics as food are in Gordon's Chinese Products Index?

How are those dairy shares?

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iirc this is due to demand from resource hungry countries such as china

china has $1trillion in reserves - they are pushing up prices and paying top 'dollar' for commodities

naturally as they release their dollar reserves - it's 'watering down' it's value even further

this wouldn't be so bad if wages kept up with real inflation but in the uk they are not...

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The way things are going disposable income is being eroded away. In one hand and more and more out the other.

Who is making from this imbalance? It is certainly not the middle class.

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How are those dairy shares?

Stagnated at around 5.05. I took up a minority position at 4.86 but TBH am thinking about dumping them as I am not sure if RWD can capitalise on the shortage-a recent downgrade from hold to sell suggests dairy will do poorly due to the huge demand. :blink: We live in strange times.

Edited by Realistbear

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Butter makes up 60% of Walker's costs, so he must get his customers to accept price rises ahead of inflation or risk his firm's future.

'Price rises ahead of inflation'? LOL... this _IS_ inflation.

Looks like Merv can forget inflation dropping without much higher interest rates.

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'Price rises ahead of inflation'? LOL... this _IS_ inflation.

Looks like Merv can forget inflation dropping without much higher interest rates.

I think they mean above inflation, not before it.

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I think they mean above inflation, not before it.

Does this guy ever look at futures, Who on earth is advising this guy Merv. My guess is that he will be rewarded with all his lies with a Lordship to the Upper House. Certainty !! How on Earth did he expect inflation to reduce ???

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I think they mean above inflation, not before it.

The point is that the whole idea of 'price rises above inflation' is stupid when inflation has been defined to be price rises. Inflation could never rise without 'price rises above inflation'.

This is what happens when you massively inflate the money supply for years against stagnating wages: eventually all that money comes back as price inflation which will take years of stagflation to wipe out.

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In case you missed it!

http://www.bloomberg.com/apps/news?pid=206...84&refer=uk

We have always acted early to deal with the problem,'' Brown said today in an interview with GMTV. ``So you nip it in the bud, and then you don't have the problems that we had 10 or 15 years ago when we actually had 10 percent interest rates for four years.''
``Interest rates have been rising in every country and we have got to get a grip on inflation,'' Brown said today. ``I believe we will be able to keep the economy growing for an eleventh year and then for a 12th year.''

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Farmers are looking happy for the first times in years - even my uncle - :blink: Looks like a new golden age of farming is upon us. I've even noticed some local farmers coming out of retirement as there's money to be made again. Interested to see what happens to UK veg prices after all the flooding.

http://comment.independent.co.uk/columnist...icle2669858.ece

By the way, not ABOUT to blast off - they are blasting off. AGFLATION HAS ARRIVED.

Just found an answer to my veg query...

http://www.timesonline.co.uk/tol/news/weat...icle2022996.ece

Edited by gruffydd

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http://business.scotsman.com/index.cfm?id=1063102007
A recipe for disaster
DOUGLAS "JOCK" FRIEDLI
(dfriedli@scotlandonsunday.com)
For seven years, the market kept a lid on food inflation. That started changing about 18 months ago
For Walker, who runs a company employing 1,200, mostly in Scotland, there is worse to come. He has been told that the price of
butter will double over the coming year
. Butter makes up 60% of Walker's costs, so he must get his customers to accept price rises ahead of inflation or risk his firm's future.
Could he use Utterly Butterly instead?

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iirc this is due to demand from resource hungry countries such as china

china has $1trillion in reserves - they are pushing up prices and paying top 'dollar' for commodities

naturally as they release their dollar reserves - it's 'watering down' it's value even further

this wouldn't be so bad if wages kept up with real inflation but in the uk they are not...

There will come a point in time where currency devaluation by a few percent a year will not be the main issue. What I mean is, whatever the medium of exchange is, gold, dollars, etc producers of basic commodities essential for living will be able to ask whatever they like in exchange. At this point all paper and precious metal will be worthless.

Sound extreme?

http://www.amazon.co.uk/Limits-Growth-30-Y...1098&sr=8-6

"In 1972 four young scientists at MIT wrote a book called The Limits to Growth that shocked the world and became an international best-seller. Using the World3 computer model, the authors looked into the future and sounded an alarm, for the first time showing the consequences of unchecked growth on a finite planet. Their book gained worldwide attention and became the cornerstone of a global debate on how to achieve a sustainable future. Twenty years later the authors wrote Beyond the Limits, a follow-up volume that showed humanity was already overshooting Earth’s limits. Beyond the Limits again provoked a national debate and galvanized the scientific and environmental academics leaders to incorporate Limits to Growth into the core environmental studies curriculum"

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There will come a point in time where currency devaluation by a few percent a year will not be the main issue. What I mean is, whatever the medium of exchange is, gold, dollars, etc producers of basic commodities essential for living will be able to ask whatever they like in exchange. At this point all paper and precious metal will be worthless.

Sound extreme?

http://www.amazon.co.uk/Limits-Growth-30-Y...1098&sr=8-6

"In 1972 four young scientists at MIT wrote a book called The Limits to Growth that shocked the world and became an international best-seller. Using the World3 computer model, the authors looked into the future and sounded an alarm, for the first time showing the consequences of unchecked growth on a finite planet. Their book gained worldwide attention and became the cornerstone of a global debate on how to achieve a sustainable future. Twenty years later the authors wrote Beyond the Limits, a follow-up volume that showed humanity was already overshooting Earth’s limits. Beyond the Limits again provoked a national debate and galvanized the scientific and environmental academics leaders to incorporate Limits to Growth into the core environmental studies curriculum"

'Limits to Growth' is an excellent work and even more relevant today than when it was written. I attended a presentation by one of the co-authors, Dennis Meadows at ASPO-5 in Pisa last year. I'd also recommend this 1980 classic: Overshoot by William R Catton Jr.

One of the major factors behind recent food prices rises is the ramping up of ethanol production from corn. It takes the equivalent of enough corn to feed 1 person for a whole year for just 1 filling of the tank in a SUV. People in poorer areas of the world are already struggling to afford their staple diet - they just don't have the funds to compete with vehicle owners for corn when, unsurprisingly, farmers sell their harvest to the highest bidder. At some point, likely very soon, we are going to have to choose between feeding people or feeding vehicles; the advent of peak oil is going to bring this issue into sharp focus.

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Guest absolutezero
At some point, likely very soon, we are going to have to choose between feeding people or feeding vehicles

Is there only me whose stomach lurched when they read that?

It lurched because I know what they result of that choice will be. :(

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Is there only me whose stomach lurched when they read that?

It lurched because I know what they result of that choice will be.

If we're running out of cheap energy, then billions of people are going to die in the next few decades; whether from starvation, disease or war. We simply cannot support the current global population without it.

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Farmers are looking happy for the first times in years - even my uncle - :blink: Looks like a new golden age of farming is upon us. I've even noticed some local farmers coming out of retirement as there's money to be made again. Interested to see what happens to UK veg prices after all the flooding.

http://comment.independent.co.uk/columnist...icle2669858.ece

By the way, not ABOUT to blast off - they are blasting off. AGFLATION HAS ARRIVED.

Just found an answer to my veg query...

http://www.timesonline.co.uk/tol/news/weat...icle2022996.ece

Does that mean hard working tax payers can stop paying farm subsidies now??? :ph34r:

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It'll be the reason they start to spread some really nasty GM crops I think. The only way you can feed people is by messing badly with nature

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Is there only me whose stomach lurched when they read that?

It lurched because I know what they result of that choice will be. :(

Yes, the choice is clear, we've done it for the last 100 years anyway. Millions have died of starvation, malnutrition or

other avoidable diseases. It's not new, it might only get worse. But then, China is doing a great deal of investing in

Africa. There was a fantastic article on that on Bloomberg recently. Maybe the downfall of Western civilzations will be

the great start for Africa.

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By the way, not ABOUT to blast off - they are blasting off. AGFLATION HAS ARRIVED.

Might not be an entirely bad thing, there's a lot of fat f*ckers in this country. I reckon some of them could live off accumulated fat reserves for years :lol:

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Maybe the downfall of Western civilzations will be the great start for Africa.

Doubt it; Africa has always been a disaster zone. Maybe if the Chinese all move out there they could turn it into a viable continent... interestingly I was reading an article from the 19th century which suggested encouraging the Chinese to do just that. The world could have been a very different place.

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Ok, I admit that I know VERY little about world of finance but can I ask a question....?

If the problem at the moment with inflation is the oversupply of money, and that the extra money in question is generated from debt...

Does cancelling out the debt not remove the money and hence lower the total in circulation solving the inflation issue?

Or is it a case that too much exists in areas out of the control of the lenders? Gone abroad in exchange for goods and sitting in reserves in China?

Thanks.

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