What is Agflation and What Causes It?
For thousands of years the price of a loaf of bread or a bushel of corn was based on supply and demand. Supply was in most part controlled by the weather and demand was driven by the size of the population. Then we read about guys like Joseph, son of Jacob, who advised Pharaoh to store surplus grain during years of abundance against the day when there would be famine because of drought and so, despite bad weather, there was enough supply.
Presently we come to the Age of Obama and Agflation. What is Agflation? Agflation (a combination of the words "agriculture" and "inflation") is an increase in the price of food that occurs not due to the old paradigm of supply/demand/weather but to the use of agricultural products as an alternative energy resource which we now know is a disastrous failure. As well, some Agflation is also due to other non-related factors such as absurd environmental concerns and governmental mandates such as new strict rules for sleeping quarters, lighting, food storage, bathing, laundry, cooking and other intrusive and restrictive employment rules for foreign agricultural workers which put a heavy burden on farmers.
Thus while we have record production of corn (1) and soy, it does not enter into the food supply and despite the low rate of inflation, food prices have been rising in the double-digits which have been hidden by slight-of-hand techniques such as reducing package sizes and lowering the quality of ingredients.
As corn and soy are diverted to ethanol and away from the food supply, those products become too expensive for consumers who switch to wheat and other less expensive grains, driving up the prices on them as well. Then feeding animals with those grains becomes expensive and so we see prices increasing for eggs, meat, and dairy products and eventually to all prepared food products.
We need to stop the production of ethanol, scale back the intrusions of the EPA and other governmental agencies into farm business, and stop passing silly laws that help no one and only hurt farmers and eventually every consumer in our country.
ENDNOTES
(1):
NPR, 18 Jul 2012, Drought Disasters Declared In More Counties; 1,297 Affected So Far
Photo: A corn plant that was struggling to survive this week in a drought-stricken farm field near Shawneetown, Ill.
Photo Credit: Scott Olson/Getty Images...
With the addition of 29 counties in eight states today, there are now 1,297 counties across the nation so stricken by drought and heat that they've been declared natural disaster areas, Agriculture Secretary Tom Vilsack just announced. That's about one-third of all U.S. counties, he said.
In a statement posted by his department and during a briefing now underway at the White House, Vilsack noted that despite the dry conditions and scorching temperatures, forecasters still expect farms will produce "the third-largest corn crop in U.S. history" because more was planted this year than during other droughts.
