Wednesday, February 16, 2011

Food and feed and prices and plans

The price of pig feed has risen for me from $280/ton to $390 a ton, and appears to be going higher.  This really tracks an overall rise in the price of food worldwide.  The price of wheat has doubled in the past year, for instance. 

It means that this year I'm going to have to raise the price of my pigs and chickens, and I've got to think carefully about how many pigs and chickens I raise for sale.  The basic issue is that people don't like paying higher prices, but will after a while.  So by reducing my production a little, I skip the grumbling from the customers about the higher price, and start producing more when people are used to the higher prices. 

Plus it means that my capital (as in $$) needs are lower. 

In countries where a large portion of the population lives in poverty, some governments are stockpiling food so that there isn't famine, and the associated riots.  Boliva is one example in this news story.

You can expect to see the price of all food to go up this year.  My guess is you'll see meat prices go up first -- chicken, pork - and then beef eventually. 

Remember that part of this is our using food for fuel -- converting corn into ethanol.  So the next time  you talk to a policymaker, ask them why they're doing that. 

Rising food prices push millions into poverty
Food prices in China soaring

1 comment:

Jason W said...

Hurry and get that out building finished! I wanna come out and use it...