Load Up the Pantry
Brett Arends
Wall Street Journal
April 21, 2008 6:47 p.m.

There is more to consider here than just rising costs, there will also be shortages here in the United States and Canada and the EU. Shortages of flour – that means all forms of bread and cake, all forms of Pasta, and even pizza. Rice, Corn – this means Tortilla’s all kinds of corn chips, and corn based products, -- this hits cooking oil, and Beef and Pork and chicken that all are fed corn. Soy beans, Pinto beans, kidney beans will also be in short supply as these have a great deal of demand. The US has switched from an agricultural society, and a manufacturing society to a service oriented society – fast foods and restaurants, and pre-prepared meals comprise a large segment of business – in such shortages and gigantic price hikes many of these businesses will be forced out of business. And Corporations like Conagra / Banquet foods will be affected.

Welfare, food stamps and the like can only absorb so much of these kinds of people losing their jobs. No jobs, the housing and automobile industry further slumps.

Beyond stocking up on food basics and canned goods (Thinking in terms of this situation occurring for at least the next two years and maybe a third year) One can not hope to by the palettes of food that they would need to get through this. So that everyone that is able should grow their own gardens this year, and make them as large as possible growing in the extra space things like cabbage and potatoes and even onions that all hold up well in cool dry storage. Doing this not only helps yourself but it also will help those that do not have gardens by blunting the scarcity of food staples,

We might suggest also canning fruits and vegetables but the process takes a bit to be able to do it and there are a limited amount of canning jars available.

A good alternative would be vacuum sealers that can seal dry goods in smaller useable portions, and zip log freezer bags if you have a deep bed freezer – many fresh vegetables can be blanched that is boiled for a very short period not cooking it through and through and then bagging and freezing it.

Some other things that one might want to buy is Crisco as it like cooking oil has a great shelf life, and even packages of Pork Lard and even the beef fat trimmings both need to be frozen but in the absence of beef pork or chicken one might be very grateful to be able to add some flavoring to plain rice, to potato or pasta. The body does need a certain amount of fat as a lubricant, and for energy.

We normally remain on more of a prophetic and spiritual tact here but the Lord would have us also speak of those things which all men are needful of – their daily bread.

I don't want to alarm anybody, but maybe it's time for Americans to start stockpiling food.

No, this is not a drill.

You've seen the TV footage of food riots in parts of the developing world. Yes, they're a long way away from the U.S. But most foodstuffs operate in a global market. When the cost of wheat soars in Asia, it will do the same here.

Reality: Food prices are already rising here much faster than the returns you are likely to get from keeping your money in a bank or money-market fund. And there are very good reasons to believe prices on the shelves are about to start rising a lot faster.

"Load up the pantry," says Manu Daftary, one of Wall Street's top investors and the manager of the Quaker Strategic Growth mutual fund. "I think prices are going higher. People are too complacent. They think it isn't going to happen here. But I don't know how the food companies can absorb higher costs." (Full disclosure: I am an investor in Quaker Strategic)

Stocking up on food may not replace your long-term investments, but it may make a sensible home for some of your shorter-term cash. Do the math. If you keep your standby cash in a money-market fund you'll be lucky to get a 2.5% interest rate. Even the best one-year certificate of deposit you can find is only going to pay you about 4.1%, according to Bankrate.com. And those yields are before tax.

Meanwhile the most recent government data shows food inflation for the average American household is now running at 4.5% a year.

And some prices are rising even more quickly. The latest data show cereal prices rising by more than 8% a year. Both flour and rice are up more than 13%. Milk, cheese, bananas and even peanut butter: They're all up by more than 10%. Eggs have rocketed up 30% in a year. Ground beef prices are up 4.8% and chicken by 5.4%.

These are trends that have been in place for some time.

And if you are hoping they will pass, here's the bad news: They may actually accelerate.

The reason? The prices of many underlying raw materials have risen much more quickly still. Wheat prices, for example, have roughly tripled in the past three years.

Sooner or later, the food companies are going to have to pass those costs on. Kraft saw its raw material costs soar by about $1.25 billion last year, squeezing profit margins. The company recently warned that higher prices are here to stay. Last month the chief executive of General Mills, Kendall Powell, made a similar point.

The main reason for rising prices, of course, is the surge in demand from China and India. Hundreds of millions of people are joining the middle class each year, and that means they want to eat more and better food.

A secondary reason has been the growing demand for ethanol as a fuel additive. That's soaking up some of the corn supply.

You can't easily stock up on perishables like eggs or milk. But other products will keep. Among them: Dried pasta, rice, cereals, and cans of everything from tuna fish to fruit and vegetables. The kicker: You should also save money by buying them in bulk.

If this seems a stretch, ponder this: The emerging bull market in agricultural products is following in the footsteps of oil. A few years ago, many Americans hoped $2 gas was a temporary spike. Now it's the rosy memory of a bygone age.

The good news is that it's easier to store Cap'n Crunch or cans of Starkist in your home than it is to store lots of gasoline. Safer, too.

Write to Brett Arends at brett.arends@wsj.com