FOOD CRISIS AND OPPORTUNITY
I’m resisting the temptation to engage in black humor and entitle this How To Profit From The Coming World Starvation.
While we don’t need to go apocalyptic, it’s obvious to anyone who goes grocery shopping that food prices are skyrocketing. And while we may complain about this here in the US, it’s getting worse around the world – in many places a lot worse.
This is more serious than the price of oil, and that’s bad enough. Gas in the US is headed to $5 a gallon, while in many European countries such as Portugal it’s already close to $9. It’s easier to cut down on driving than eating. We can scrimp and save on food as this report shows, but no one wants to starve.
That’s why food riots are taking place across the globe. From December 2008 to February 2010, global food prices have risen more than 60% — and research by IMF economists is showing that with every 10% increase in food prices comes a 100% increase in antigovernment protests.
This is particularly true in low-income countries – such as Tunisia, Egypt, Libya, and Yemen, which is why antigovernment revolutions there started with food riots.
The IMF researchers found much less of a correlation between food prices and political unrest in high-income countries – but that’s going to change, certainly in the US.
40 million people are on food stamps, and even with food stamps, a majority spend over 1/3rd of their after-tax income on food. The federal government with its multi-trillion dollar deficits can no longer afford to continue such food stamp largesse. The food stamp program must be cut substantially – with a resultant food riot coming near you.
What’s driving this global food price explosion? There’s a slew of factors but two stand out.
First is the biofuel scam. It’s not just the corn-into-ethanol crony capitalism ripoff in the US. As the New York Times reported yesterday (4/06), the scam is world-wide, such as Thailand growing cassavas for Chinese biofuel.
The NYT article is worth reading carefully, especially in light of this quote from it:
"With food prices rising sharply in recent months, many experts are calling on countries to scale back their headlong rush into green fuel development, arguing that the combination of ambitious biofuel targets and mediocre harvests of some crucial crops is contributing to high prices, hunger and political instability."
That’s a flashing red sign to avoid any attempt to cash in on rising commodity prices based in any way on biofuels.
If you watch CNBC, it’s hard to avoid all the commodity investment "I trade the world" commercials. Most all of them are based on the biofuel scam. They are a superb way to lose your shirt.
Or take one of the big gun Ag-Funds, the Baring Global Agriculture Fund. It’s run by guys who buy into global warmism and place their investment bets accordingly.
The second primary cause of global food price explosion is hundreds of millions of Chinese and Indians now able to afford an increasingly middle-class life style which includes eating a lot better than a bowl of rice.
The Financial Times in London is reporting that corn and consequently meat prices are "set to explode," as China will be increasing its imports of corn from 1.3 million kilotons last year to 9 million this year and next.
40% of US corn production is now diverted to making ethanol due to ethanol subsidies. Paul Ryan’s budget zeroes the subsidies out. That’s the good news. The bad news is there will still be a giant fight by the moochers to keep their subsidies while corn & meat prices soar.
So – what should you personally do about all of this? Well, of course, you should start (if you’re not already) storing food. There are lots of folks on the TTP Forum who are knowledgeable on this and will be happy to provide great advice. All you have to do is ask!
But how do you go beyond defensively hunkering down and riding out the storm in a survivalist mode? How do you profit from this mess? After all, there were plenty of smart folks who made money during the Great Depression.
There’s no shortage of "experts" who say they can tell you how. You could for example pay a cool $3,500 to attend the Agriculture Investment Summit in London (June 21-23).
Watch out for the green-fuel glo-warmers.
You could try and pick some winners, like Brasil Foods, the 10th largest food company in the world and traded on the Bovespa exchange in Sao Paulo.
Myself, I’m paying attention to Alex Alexiev.
Those of you who’ve been to one of the TTP Rendezvous know Alex as one of the world’s great counterintelligence experts, a true legend at the Pentagon’s Defense Intelligence Agency.
Alex escaped from Communist Bulgaria in the 1970s. We became good friends during the Reagan years and cooperated closely in developing the Reagan Doctrine. So it was great for Rebel and me to have Alex as our house guest this past weekend.
After solving several of the world’s other major problems, we got around to the worldwide food crisis. Naturally, Alex is already on the case and gave us an in-depth analysis of what he’s working on.
It’s an amazing fact of history that with all the plagues, invasions, wars, and other disasters to befall Europe over the last 2,000 years, one European country – Bulgaria – has never had a famine. There’s always food, because the land is so productive and so are the people. Which is why Bulgaria is known as The Land Without Famine. Oh, there’s always been good wine, too.
Alex is a close advisor to Bulgaria’s business and government leaders, and has helped them craft an increasingly free market economy with pro-business incentives and the lowest tax rates in Europe called "10-10-10" – 10% corporate income, 10% personal income tax, and 10% capital gains.
This creates an environment in which residency could be appealing, or as a Plan B option for a 2nd home. (A one or two bedroom condo in a ski resort can be had for amazingly low prices right now…. $60-$75K.)
What’s also interesting is that there are almost no countries in Europe – one of the key agricultural markets in the world – that have good "ag-land," agricultural land that is inexpensive and available under market conditions. Bulgaria and its neighbor to the north across the Danube, Romania, are just about the only ones left (leaving out Ukraine which is not politically attractive).
A hectare (2½ acres or 10,000 square meters) of good ag-land in Bulgaria is less than $3,000 – versus $42,000 in the Netherlands, or $28,000 in Germany, France, or Belgium. That’s now. Bulgaria ag-land is currently appreciating at 15% a year.
China, as you know, is buying up agricultural land all over the planet, especially Africa, where governments who agree find themselves beholden to Beijing. The Bulgarian government really wants to avoid this. They want to make their ag-land available to Westerners who will invest and enable Bulgarians to grow food on their land that they can sell to China and other markets. They want China as a customer, not a landlord.
Right now, Alex is in Sofia (Bulgaria’s capital) meeting with officials, private agricultural companies, and the folks who run three ag-land funds on the Sofia stock exchange.
Rebel and I can’t wait to hear what he’s learned, and Alex will be presenting an Updated Land Without Famine Webinar (an online seminar) on Bulgaria when he returns. If you want to be notified of this webinar, please contact [email protected].
We’re also planning a couple of TTP trips to Bulgaria with Alex starting in June. These will be 7 day trips open to anyone interested in seeing Bulgaria, focusing on the agriculture industry and opportunities there. We’ll be visiting both the northern and southern areas as well as the Black Sea coast. In Sofia, we’ll be meeting with local businesses and government leaders.
If you’d like to join us, again please notify [email protected]. You will find a culture rich in history, great food, beautiful countryside, and welcoming, warm people. Rebel, Alex, Joel Wade, and I all plan to be there!
Crisis and opportunity… the emerging food crises all over the world are going to cause great suffering. There is every reason to make a moral profit off of them – profiting from helping provide a solution, growing more food to feed more people. That’s the morality of capitalism.