Your Best Investment – Stocking the Pantry

23 04 2008

I know I just posted about the rise in food prices the other day, but today the Wall Street Journal ran a piece called Load Up the Pantry which explains how much money sense it makes to stock up on food:

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.

Let’s see, over the last three years, buckets of wheat up 300%. Not bad. But still it misses the point. Wheat should be grown for eating, not selling. When the motivation for buying food is to feed your family, and feed your neighbor, you’re not likely to be disappointed, regardless of what the markets (whether free or managed) do.

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