Food Shortages, Labor Shortages, Rising Gas Prices


Should we be worried that we might face a food shortage?  Why are gas prices continuing to rise?

One of the drivers of high food prices was government policy and specifically the U.S. corn-based ethanol program. The United States is the biggest producer and exporter of corn in the world, and roughly 40% of the crop is used to make ethanol for American cars.

fill me up

Due to a severe drought in the Midwest, corn prices continue to rise, so do the prices of substitutes — wheat, soybeans and most other staple crops have seen large price spikes.

The United Nations considered it important enough to formally request the Obama administration to cease all government-mandated ethanol production, following similar pleas from the G-20, China, India and France.

Should the administration and Congress abandon their environmental goals of producing green energy and also risk causing prices to rise at the pump? (Biofuels account for roughly 5% of U.S. oil consumption according to estimates by the Financial Times — an amount roughly equivalent to the annual production of Libya or Algeria.) Or do they risk causing mass suffering among the world’s poorest citizens?

The pressure from the drought already surfaces in some food categories. Beef prices are up 6.6 percent in the last year and chicken prices are up 5.5 percent, CPI data show. Bread and cereal prices are both 3.2 percent higher than year-ago levels, eggs are up 2.4 percent, flour is up 5 percent and snacks are up 7.1 percent.

Costs in some grocery categories, though, have dropped, helping to temper the overall increase. Milk prices are down 1.8 percent over the last year, fresh fruits and vegetables have dipped 1.8 percent and pork prices have dropped 1 percent, according to the CPI.

Food sales are sluggish.  Therefore, because of the balance between increases and decreases, food manufacturers are reluctant to charge higher prices.

“This is really about the weakness for the demand for food in supermarkets, so they are being forced to hold the line on some prices,” said Harry Balzer, a food and beverage analyst at the NPD Group, a consumer research and consulting firm based in Long Island, N.Y . “There is downward pressure on prices because consumers are cleaning out the pantry. We are using up our inventory more.”

However, there is a 20 percent drop in laborers this year causing a labor shortage in California. It’s $38 billion agricultural sector is facing a scarcity of labor and it is the worst it has ever been. Some crops-everything from strawberries to lemons to peppers, carrots, and turnips-aren’t get picked this season and just being left in the field due to a lack of workers.

migrant farm workers

Stronger border controls are keeping workers from crossing into the U.S. illegally, and the current guest worker program is not providing enough bodies. The work force is starting to retire and they can’t get anyone to replace them.

There is a growing concern that farmers will not have enough hands for the grape harvest this fall.  Among the highest paying jobs, the berry pickers, few workers showed up in the spring.

Because so many are unemployed, there shouldn’t be a problem filling those vacancies.  RIGHT?  As reported, local residents have not come out to apply to work in the fields.

One astute person commented on the article-California Farm Labor Shortage ‘Worst It’s Been, Ever’

“This means we can end the extended unemployment handouts in that region. If there are so many jobs going unfilled there’s no reason for the extended benefits to continue since anyone that really wants to work can easily find a job.”

Craig Underwood, a California farmer stated, Americans will still have food. “It’ll just be grown in Mexico or Or China.”

References:
The Trading Deck
The Tribune-Democrat
CNBC

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