Posted on 05/04/2011 6:47:32 PM PDT by blam
Smithfield CEO: Higher Food Prices Are Here To Stay
Phoenix Capital Research
April 4, 2011
Here’s a zinger of a news story that most commentators haven’t bothered to take note of…
The CEO of Smithfield Farms, the largest pork producer in the US. Among other things he said:
“Maybe to someone in the upper incomes it doesn’t matter what the price of a pound of bacon is, or what the price of a ham, or the price of a pound of pork chops is,” he says. “But for many of the customers we sell to, it really does matter.” Workers can share cars when the price of oil rises, he quips, but “you can’t share your food.”
Mr. Pope also worries about the impact on farmers, who are leveraging up operations to afford the ever-rising price of land and fertilizer that has resulted from the increased corn demand. “There are record prices for livestock but farmers are exiting the business!” he exclaims. “Why? Farmers know they won’t make money.”
Weather is a factor, too. “We’ve had the luxury for the last three years of extremely good corn crops, with high yields and good growing conditions. We are just one bad weather event away from potentially $10 corn, which once again is another 50% increase in the input cost to our live production.”
…Not all companies will survive this economic whirlwind. Mr. Pope recalls what happened the last time there was a surge in corn prices, in 2008: “The largest chicken processor in the United States, Pilgrim’s Pride, filed for bankruptcy.” They “couldn’t raise prices, so their cost of production went up dramatically.” Could it happen again? “It darn well could!” Mr. Pope exclaims.
…Mr. Pope says the “losers” here “are the consumer, who’s going to have to pay more for the product, and the livestock farmer who’s going to have to buy high-priced grain that he can’t afford because he’s stretching his own lines of credit. The hog farmer . . . is in jeopardy of simply going out of business ’cause he doesn’t have the cash liquidity to even pay for the corn to pay for the input to raise the hog. It’s a dynamic that we can’t sustain.”
So here’s a CEO, someone with actual business experience (not some moron academic who’s never run a business a day in his life) telling us the following:
* Food prices are up a lot and going higher in the future.
* Despite high food prices, farmers are quitting farming (lower supplies are coming).
* Food companies will be going bankrupt (even lower supplies are coming).
In other words, we are rapidly heading into a food crisis. Food prices are NOT going to be coming down. And we’re going to be seeing food shortages in the US in the coming months.
Smart folks are already preparing their families and portfolios for what’s to come.
This is from an alarmist blog.
The sky is falling!! The sky is falling!!
With the dollar dropping, our farmers will switch to selling more overseas... food here will continue to go up in price.
Wheat is one of their most important farm products ~ but there won't be any.
Well...it is alarming news.
Warnings of the CEO of the largest pork producer in the US should be ignored?
There won’t be much corn or soybeans in this country if the weather doesn’t settle down soon.It’s the 4th of May and there is nothing planted yet here in central Ohio.The rest of the midwest is the same-too wet and too cold.
What he means is “higher prices”. Won’t bother me and mine much, but I certainly hope that the Hope and Change voters enjoy them.
We were making humorous comments (at our regular Tuesday night card game) about putting 'smoke pots' out in our gardens.
If this years corn crop is low due to poor planting weather, the price of corn should go up. Shouldn’t that also raise the price of corn ethanol and the gasoline/ethanol blends?
but I certainly hope that the Hope and Change voters enjoy them.
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They don’t sweat the prices after all they pay no taxes, their kids get 2 free meals at school and we both know who is buying the food the morbidly obese mother is eating! Hope and change my butt...
“It’s the 4th of May and there is nothing planted yet here in central Ohio.The rest of the midwest is the same-too wet and too cold.”
Same here in southern Wisconsin. I kind of thought they’d at least disk these past two days, but...nothing. There are 700 acres around me just aching to be planted with sweet corn, but the soil is still too cold. And rain again, tomorrow!!
And I should add the CRAPPIEST pork producer. I wouldn't eat that mushy, salt soaked garbage. Foul tasting. I am very lucky to live in a small town with a real butcher shop and pork that comes from smaller, better producers. Otherwise I'd have to quit eating pork.
A couple of years ago I was in a hurry and picked up some Smithfield chops at Kroger to save a little time on my way home, knowing I would be sorry. And we were. My wife and I threw out the pork after eating very little of it. That was some dinner.
Unfortunately, most/all the major grocery chains carry nothing but (in-eatable) Smithfield pork.
And, up the road from me are fields of golden wheat ready for harvest. I've never seen wheat growing this close to the Gulf Of Mexico.
Plus our government blew the levee to flood all of that farmland in Missouri.
This is a 500 year flood. (Which doesn't mean it only happens every 500 years ~ rather, it could happen every year but in 500 years it would usually only go this high).
Among tributaries are the Ohio, the Wabash, the Miami, the Monongahela and that other one eh.
The Corps of Engineers is currently at work figuring out how to STOP THE TENNESSEE RIVER in its entirity.
Soybeans are of secondary interest as a source of food ~ fancy beans are primary, and that Delta country being "saved" (Not Likely) is a chunk of bean country, as is the area they just flooded, as is Mississippi County Arkansas, and Southeastern Indiana, and Western Kain-tuckeh.
This is an incredible disaster for Mexico!
For us it's a quite ordinary disaster.
Catfish supply in North Texas drying up
Restaurants are having trouble staying stocked as rising grain costs drive farmers to close ponds
A combination of cheap imports, high prices for corn-based catfish feed, high fuel costs and, until recently, low market prices for fish has made fish farming a money-losing proposition for many producers, Avery said. Then the recession has kept people from dining out, and much farm-raised catfish is consumed in restaurants, he said.
“Grain prices have gone up so high that it makes growing crops more profitable. We’ve gone through these cycles before, but this is more extreme,” Scott said.
Aside from foreign competition, the near-doubling of grain prices made fish farming unprofitable for many producers, since feed represents 60 percent of costs
http://www.star-telegram.com/2011/03/20/2936211/catfish-supply-drying-up.html
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Ethanol subsidies help drain catfish ponds
“Catfish farmers across the South, unable to cope with the soaring cost of corn and soybean feed, are draining their ponds.... Corn and soybeans have nearly tripled in price in the last two years, for many reasons: harvest shortfalls, increasing demand by the Asian middle class, government mandates for corn to produce ethanol and, most recently, the flooding in the Midwest.”
Meanwhile, Congress does nothing about the aspect of this that they could address — agriculture subsidies in general, and ethanol subsidies in particular.
If they don't blow 'em up the fields will be flooded until September!
I went to Safeway today. Bought a pound of Hormel bacon for $7.49. It was on sale.....down from $8.49. As I put it in the fridge, I noticed it was only a 12 ounce package. I think our next bacon, lettuce and tomato sandwiches will only be lettuce and tomatoes. I noticed many prices are staying the same, but the packages are much smaller. Example: six months ago I could buy a 14 ounce bag of Lay’s potato chips for $3.99. Today I paid $3.99 for 10.5 ounces.
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