This page has been archived and commenting is disabled.

Food Inflation Comes To America: General Mills, Kraft And Kellogg Hike Prices On Selected Food Products

Tyler Durden's picture


After denying for months that surging food prices will eventually come to the consumer, hoping that instead food companies could absorb the margin drop, sellside research is finally capitulating to the reality of what is really happening in the retail store. In a note discussing General Mills, Goldman Sachs says the company raised prices on snack bars some 7% last week. Goldman further clarifies that "this reportedly followed a comparable increase taken by K on its snack bars in mid-December. In addition, KFT has reportedly announced a 6% increase on select Planters branded nut products. We expect more price increases to be announced by the food  companies in the coming weeks." Maybe, but the Chairman sure doesn't. And the Chairman is always 100% correct.

Other observations from Goldman on what are now seen as inevitable price increases across numerous food verticals.

These pricing actions support our Food sector view that price momentum will continue to build as 2011 progresses, driven by easing promotional spending and list price increases (see our 1/5 report, Time to embrace inflation; Upgrade Food to Neutral, GIS to buy). This should drive top-line acceleration and margin stabilization over the course of 2011. Evidence of the progression is already apparent in retail scanner data (see our 1/11 report, Progression to a ‘less bad’ promo environment continues). Scanner data is likely to continue to show a measured pace of price growth. That said, we acknowledge that the growth is likely to build gradually as the pass-through of list price hikes to retail shelves lags and the reduction of promotional spend takes time to execute.

As a reminder, in December, the food component of the CPI increased by 0.1%, the lowest amount since July...

And just to complete the circus, Goldman now views price pass
throughs as a good thing. See: it resolves the margin issue. Uh, yeah.
But someone should explain to Goldman that when calculating revenue, one
multiples Price (P) by Volume (V). And in a stagflationary economy, and
increase in P results in a more than commensurate decline in V,
offsetting all margin boosts.

GIS (Buy) remains our top Food pick and snack bar price hikes reinforce our conviction. To our knowledge, Mills has now executed price increases in categories that account for roughly half of its US retail portfolio (and we think there may be other increases we are not yet aware of). The snack bar price hike alone may tally to 40 bps of price growth at the aggregate US retail segment level (roughly 6% of sales rising 7%). This 40 bps is meaningful when you consider that our model only aspires to 140 bps of price growth on average for GIS’ US Retail Segment over the next four quarters. And the coinciding price moves by Mills’ competitors reduces the risk of cross-price elasticity-driven volume softness. Our PT is unchanged.

And to the Fed, which erroneously believes that a one day sell off in stocks will prevent oil (and food) prices from posting double digit returns on the back of several trillion pieces of linen printed globally in 2010, you have our condolences.... Better keep those emergency evacuation G-Sixes fueled, staffed and ready.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 01/20/2011 - 15:53 | 890806 Larry Darrell
Larry Darrell's picture

Margin maintainence bitchez!!

Thu, 01/20/2011 - 15:56 | 890823 jus_lite_reading
jus_lite_reading's picture

How else do you support P/E ratios of 5000x and massive insider sales? Move all jobs to China and pay those slaves $.0002 per day.

Thu, 01/20/2011 - 16:25 | 890956 Sudden Debt
Sudden Debt's picture




Thu, 01/20/2011 - 16:27 | 890971 jus_lite_reading
jus_lite_reading's picture

Wait- did you see THIS?!




Time to abolish religion! SAVE A BUCK! (or Drachma)

Thu, 01/20/2011 - 16:34 | 891014 bankrupt JPM bu...
bankrupt JPM buy silver's picture

DOW is green.  Nuff said.

Thu, 01/20/2011 - 17:55 | 891420 cowdiddly
cowdiddly's picture

You can always tell when they make the green squares out of Americans. Greasy mo fo's

Thu, 01/20/2011 - 15:56 | 890831 Larry Darrell
Larry Darrell's picture

And on a more thought provoking note:  will the food retailers attempt to eat some of these increases in order to keep people visiting their stores?  Or are their margins already too thin to help keep the populace in the dark any longer?

Thu, 01/20/2011 - 16:03 | 890861 Cognitive Dissonance
Cognitive Dissonance's picture

Isn't CNBC running a special this week about supermarkets? Here it is, Supermarkets Inc. tonight, Thursday 01-20-2011.

Thu, 01/20/2011 - 16:42 | 891062 Gully Foyle
Gully Foyle's picture

A year or so ago there was a story about supermarkets scamming shoppers by not resetting scanners for special sale prices. The advice was to compare prices after you checked out in case your store was cheating.

Thu, 01/20/2011 - 16:51 | 891120 Cognitive Dissonance
Cognitive Dissonance's picture

I always watch the numbers while the items are being scanned. About every second trip I find a problem, usually with something not scanning on "sale". While I might not remember every sale price I do remember exactly what should be on sale. And I always stop the checkout person when something doesn't look right.

My adult son paid me the best compliment the other day. When he was young he always dreaded going to the supermarket with me because I would fight over a quarter. And back then the scanners were wrong every trip on multiple items. But the other day he said to me "Dad, you're the last person I would want to be behind in the checkout line and the first person I would go to if I had a problem because I know you would fight to the end."

At least I told myself it was a compliment. :>)

Thu, 01/20/2011 - 18:07 | 891463 -Michelle-
-Michelle-'s picture

It's a compliment, or at least it would be to me.

I always give fair warning to people who come up behind me in line.  I've got a lot of coupons and a spreadsheet.  I don't buy anything that's not on my list and I only shop from the sales circular, so I know what my total should be down to the penny.

Thu, 01/20/2011 - 16:46 | 891088 Overpowered By Funk
Overpowered By Funk's picture

Meanwhile Steve Liesman waits patiently for wage inflation - because that's "real inflation". Commodity prices are noise nothing more.

I gotta give to guys like he and Bernanke that can sit there with a straight face and tell me that the CPI is benign. Takes a large set of attachments to roll that bullshit out, and brass ones at that.

Thu, 01/20/2011 - 16:54 | 891133 Cognitive Dissonance
Cognitive Dissonance's picture

You give them too much credit. The brainwashed and evangelized don't believe they are lying, thus there is no emotional discomfort involved. Though Bernanke's last 60 Minutes appearance did show some cracks in the facade.

Thu, 01/20/2011 - 17:45 | 891392 trav7777
trav7777's picture

because in all other inflationary environments like Chile, Colombia, Argentina, Brazil, Mexico, Russia, Hungary, etc., wages ALWAYS caused the inflation...right?  Oh no wait, they didn't

Thu, 01/20/2011 - 20:47 | 891888 TexasAggie
TexasAggie's picture

The MSM or it is LSM don't tell the average reader/viewer that food and energy are excluded from hte CPI.  Therefore, the shoppers see the rise in food and energy and are confused, just as the MSM wants.

Thu, 01/20/2011 - 20:58 | 891912 ToddGak
ToddGak's picture

Certainly no threat of wage inflation with 20% unemployment...

My buddy in Arizona does desktop IT support...he got laid off recently and let me know that in looking for jobs, he found out that his job now pays about a third of what it did when he got hired 5 years ago.  So yeah, Liesman's gonna be waiting a while...

Thu, 01/20/2011 - 16:05 | 890866 SilverRhino
SilverRhino's picture

Retail grocery has the thinnest margin and highest entry costs of almost any industry in the USA. 

Thu, 01/20/2011 - 16:14 | 890915 BRAVO 7
BRAVO 7's picture

maybe so, but which is it? is the price going up or the value of the $$$ going down?

Thu, 01/20/2011 - 16:25 | 890953 SheepDog-One
SheepDog-One's picture

'Which is it'? LOL you cant be serious...or maybe you work at the FED?

Fri, 01/21/2011 - 12:16 | 893408 ColonelCooper
ColonelCooper's picture

I guess really, since the answer is both, it's a fair question.

Thu, 01/20/2011 - 19:40 | 891751 Rainman
Rainman's picture

Correct about the margins. So it's always about volume !! In SoCal, I have 13 grocery stores/warehouses within a 5 mile radius of my home. Each have been price cutting against each other for years and even more so recently. I suspect some will go bye-bye as the margins squeeze down further. With that kind of competition around, attentive shoppers know what to buy and where and when to go. And the self-bagging/no credit cards are the best in overall pricing. Like the gasoline business, the retail food market will have you pumping up your own bag and checking yourself out. They are only optional indoctrinating now. 

Cereal and chips are the biggest ripoffs. I won't notice a price hike. 

Thu, 01/20/2011 - 16:39 | 891042 Gully Foyle
Gully Foyle's picture

Johnny Guitar Watson Ain’t That A Bitch lyrics

Eew, Lord have mercy, I can't get ahead, no way I try
Everything is out of pocket, somebody do somethin'
The brother's situation is abstract, listen, mm

I'm workin' 40 hours, six long days
And I'm highly embarrassed ev'rytime I get my pay
And they're workin' everybody
Lord, they're workin' poor folks to death
And when you pay your rent and your car
Note, you ain't got a damn thing left

Ain't that a bitch - yes it is
Somebody doin' somethin' slick -
It's got me wonderin', which is which
Might as well go uptown and dig a ditch
Ain't that a bitch - yes it is - now ain't that a bitch

But let me tell you about my qualifications
I program computers
I know accounting and psychology
I took a coarse in business
And I can speak a little Japanese -
Got to work two years to get one week off with pay
And when I'm on my job, I better watch every word I say

Ain't that a bitch - ha ha, boy
Somebody doin' somethin' slick - downtown
It's got me wonderin', which is which
Might as well go uptown and dig a ditch
Ain't that a bitch - it's way too cold - ain't that a bitch
Make me wanna holler

Ah Lord, Lord, Lord, have mercy to see
Won't somebody please help me to see now, Lord
I wanna play the guitar, come here guitar
Aw, somebody doin' somethin' slick

Now listen at this
Stopped at the supermarket to get myself somethin' to eat
And when I looked at the prices, it knocked me off of my feet
I was in the baloney section, and I had to take myself a close look
Now Abdul Jabar couldn't have made these prices with a sky hook

Ain't that a bitch - he he, yes it is
Somebody doin' somethin' slick -
It's got me wonderin', which is which
Might as well go uptown and dig a ditch
Ain't that a bitch - hm - so ain't that a bitch

Oh, ain't that a -------- bitch
Sure is somethin' slick goin' on, sure is somethin' slick
Sure is somethin' slick goin' on, sure is somethin' slick
Ain't that a -------- bitch
Sure is somethin' slick goin' on, sure is somethin' slick
Sure is somethin' slick goin' on, somebody sure is slick

Ain't that a -------- bitch
Sure is somethin' slick goin' on, sure is somethin' slick
Sure is somethin' slick goin' on, sure is somethin' slick
Sure is somethin' slick goin' on, sure is somethin' slick
Ain't that a -------- bitch
Sure is somethin' slick goin' on, somebody sure is slick ....

Thu, 01/20/2011 - 17:11 | 891241 Don Birnam
Don Birnam's picture

This Goldman report does call to mind a recent piece I read indicating that the price per pound of dressed squid has dropped significantly over the past 24 hours.

Thu, 01/20/2011 - 15:54 | 890810 jus_lite_reading
jus_lite_reading's picture

Sheessse! Don't worry mon! The Bernank's got this! 100%. Guaranteed. In 15 minutes or less. Everything solved. 100% insolvent proof too! WOW!

Thu, 01/20/2011 - 15:54 | 890811 Cognitive Dissonance
Cognitive Dissonance's picture

Please, I beg of you, do whatever else you want. But leave my Mac and Cheese alone.

Thu, 01/20/2011 - 16:05 | 890870 cossack55
cossack55's picture

Noticed KFT mac & cheese, which has been around 2 for buck for ever, is now $1.43/box.  Too late CD.

Thu, 01/20/2011 - 16:08 | 890881 youngman
youngman's picture

When I was in college....I lived on it......17 cents a box then...

Thu, 01/20/2011 - 16:32 | 891000 Sudden Debt
Sudden Debt's picture

When I was a student, I had a room above a Turkish Pitta restaurant and across the street there was a Illy coffee bar and next to it a Bar.

In those day it was my little universe :)

Thu, 01/20/2011 - 16:08 | 890884 Cognitive Dissonance
Cognitive Dissonance's picture

This means war. :>)

Thu, 01/20/2011 - 16:10 | 890894 Rodent Freikorps
Rodent Freikorps's picture

No kidding. It was the only thing making free-range alley cat palatable.

Thu, 01/20/2011 - 16:15 | 890920 Dr. Richard Head
Dr. Richard Head's picture

Whoever junked you is a moron.  That was pee in me pants funny.

Thu, 01/20/2011 - 16:22 | 890942 Pladizow
Pladizow's picture

The only thing that has a chance of sparking the next American revolution is a threat to food supply.

As long as an American has a cheese burger in one had and the clicker in the other, their government can do what ever they want to them.

The last 4 years exists as proof!

Thu, 01/20/2011 - 16:35 | 891022 bigdumbnugly
bigdumbnugly's picture

you're right, pladdy.

so many people on here saying the pitchforks are out and such things as that but a pitchfork or two in a whole herd of bovine isn't very intimidating. 

until the family's decision comes down to choosing between supper or the cable tv, ain't nothin gonna happen.

for all the calls to action the question remains unanswered: who will bell the cat?


Fri, 01/21/2011 - 12:18 | 893417 ColonelCooper
ColonelCooper's picture

The sad part is that 43 million Americans have faced that choice.  Fortunately for them, they can leave the cable on, and go get food stamps.

Thu, 01/20/2011 - 16:25 | 890954 Cognitive Dissonance
Cognitive Dissonance's picture

Agreed. Too funny by a mile. Brings all kinds of images to the mind. I instantly thought of Julia Child.

Thu, 01/20/2011 - 16:39 | 891041 bigdumbnugly
bigdumbnugly's picture

free range alley cat.  mmmm mm.  gives paws for thought when hungry.

Thu, 01/20/2011 - 17:16 | 891271 Arkadaba
Arkadaba's picture


Thu, 01/20/2011 - 19:22 | 891686 tellsometruth
tellsometruth's picture

Holly shit thats funny or err sad or ... it says something... oh wait family guy is on tbs for 2 straight hours tonight! that will help ease the pain of the obvious... wouldn't it be great to have Brian on family guy go off about JP MORgue Santelli style... when that happens I'll know PM Mania is here

Thu, 01/20/2011 - 16:26 | 890964 SheepDog-One
SheepDog-One's picture

Free range alley cat, LULZ

Thu, 01/20/2011 - 16:27 | 890966 cougar_w
cougar_w's picture

Try dog. You'll never go back.

Thu, 01/20/2011 - 16:39 | 891044 andybev01
andybev01's picture

Wok the dog.

Stock up on soy sauce.

Thu, 01/20/2011 - 16:32 | 891002 plocequ1
plocequ1's picture

Go to BJs and buy 100 20 packs and store them with your gold

Thu, 01/20/2011 - 16:08 | 890886 DollarMenu
DollarMenu's picture

They will leave the formulation alone, but it will cost you more money.

Not too big a price to live in the Home of the Free to eat as you choose,

but an increase none the less.

Thu, 01/20/2011 - 16:42 | 891063 andybev01
andybev01's picture

I dare you to look here , and not make some this evening.

Thu, 01/20/2011 - 18:06 | 891457 RockyRacoon
RockyRacoon's picture

With or without the bugger?

Thu, 01/20/2011 - 16:44 | 891074 Financial_Guard...
Financial_Guardian_Angel's picture

Ah! Me and my daughter still eat it all the time. Can't take it away---no!!

Thu, 01/20/2011 - 17:18 | 891283 Arkadaba
Arkadaba's picture

Cog, my ultimate comfort food is KD with chopped up hot dogs mixed in - very yummy!

Thu, 01/20/2011 - 18:07 | 891461 RockyRacoon
RockyRacoon's picture

Add a dash or two of Worcestershire sauce.  It changes the color a bit and tastes great.

Thu, 01/20/2011 - 16:32 | 890812 Salinger
Salinger's picture

Long before actual price increases are implemented packaged goods companies cut back on promo activity, which for all intents and purposes amounts to a price increase. Still others modify formulations and maximize efficiencies. Long ago food companies learned to source ingredients globally e.g. the dehydrated strawberries in your Cheerios come from China and in recent years back office functions have moved to India etc. There ain't much more to take out of the system:   packaging has long since been light weighted; factories have been consolidated and automated;  and with help from the good folks at Big Agri, that grain of genetically modified wheat and touch of natural artificial sweetener  are part of a balanced diet that in combination with the hormones and antibiotics in your milk will make you the picture of health until you are diagnosed with a form of cancer that didn't exist 50 years ago.  Transportation costs, energy costs, diversion of crops to ethanol along with the impacts of QE 1&2 on commodities have left the food companies with no other options.  

Of course the people who will feel this the most are the middle class who don't (yet) qualify for food stamps.

Thu, 01/20/2011 - 16:33 | 891012 Pladizow
Pladizow's picture

I can produce all the milk I need!

Thu, 01/20/2011 - 16:48 | 891098 Financial_Guard...
Financial_Guardian_Angel's picture

I need a jug, er, a gallon from you if you can spare it for a ZHer!

Thu, 01/20/2011 - 15:54 | 890816 haskelslocal
haskelslocal's picture

There products are junk anyway! Garbage food with no nutrients that are actually stuffing piglet people yet leaving them malnourished. Great way to waste value on food stamps! Thanks Tony... You're Great!!

Thu, 01/20/2011 - 16:03 | 890858 firstdivision
firstdivision's picture

If Taco Bell starts raising their prices, that will defo put a pinch in my wallet.

Thu, 01/20/2011 - 16:22 | 890948 101 years and c...
101 years and counting's picture

i went to taco bell last w/e.  first time in at least 2 years.  wtf happened to their $1 menu?  $1.39 for a double decker and $1.59 for a chili cheese burrito. Outrageous!!!

Thu, 01/20/2011 - 16:35 | 891023 tmosley
tmosley's picture

Last time I went to Taco Bell, I had to seal off one of the bathrooms in my house, permanently.

Thu, 01/20/2011 - 15:55 | 890821 Dr. Porkchop
Dr. Porkchop's picture

Ben: Rollin' in my G5, G5...


At the supermarket the other day, there was some mac n cheese, individual serving. Now mac n cheese from the deli section, being made with real cheese, is never going to be cheap, but they were selling a single serving for nine fucking dollars!!

Thu, 01/20/2011 - 15:59 | 890841 Cognitive Dissonance
Cognitive Dissonance's picture

Nine dollars? It must have had chunks of Spam in it.

See my post above. There are a horde of desperate men such as myself who need their daily fix of Mac and Cheese. Do what you want with the price of all the other food. But keep your fingers off my Mac and Cheese or we shall come to blows. :>)

Thu, 01/20/2011 - 16:05 | 890867 Dr. Porkchop
Dr. Porkchop's picture

Once they attack the price of Cheez Doodles and the Dollar Menu, all hell will break loose!

Thu, 01/20/2011 - 16:10 | 890897 DollarMenu
DollarMenu's picture


Thu, 01/20/2011 - 16:14 | 890905 Cognitive Dissonance
Cognitive Dissonance's picture

Thu, 01/20/2011 - 16:14 | 890914 TruthInSunshine
TruthInSunshine's picture

Sesameeditus of the breastesus'!

Thu, 01/20/2011 - 17:26 | 891319 downrodeo
downrodeo's picture

Well that is about the creepiest thing I've seen today, but I've still got a few hours left...

Thu, 01/20/2011 - 18:00 | 891440 Temporalist
Temporalist's picture

Seriously most people develop fear of clowns as fear of a child clown just started.

Thu, 01/20/2011 - 21:19 | 891961 Arkadaba
Arkadaba's picture

That baby clown freaked me out!

Thu, 01/20/2011 - 19:20 | 891680 goldsaver
goldsaver's picture

absofuckinglutelly priceless!!


Thu, 01/20/2011 - 16:38 | 891039 Common_Cents22
Common_Cents22's picture

I think it had real bits of panther.

Thu, 01/20/2011 - 17:32 | 891350 Bastiat
Bastiat's picture

I've eaten cougar . . .

Thu, 01/20/2011 - 17:56 | 891422 andybev01
andybev01's picture

+ 100

(how many licks does it take to get to the center of a tootsie-pop?)

Thu, 01/20/2011 - 19:22 | 891688 goldsaver
goldsaver's picture

So have I. And she was very tasty!

Thu, 01/20/2011 - 16:26 | 890962 TruthInSunshine
TruthInSunshine's picture


Thu, 01/20/2011 - 16:02 | 890824 TruthInSunshine
TruthInSunshine's picture

Bernanke has told all energy, food, educational, health insurance and other 'volatile' sector companies to hike to the moon, as their prices aren't incorporated into the CPI.

Take it away, Bernank:

As I walk through the valley of the shadow of death
I take a look at my life and realize there's not much left
Cause I've been blastin' and laughin so long that
Even my ma'ma thinks that my mind is gone
But I ain't never crossed a man that didn't deserve it
Me, be treated like a punk, you know that's unheard of
You better watch how you talkin, and where you walkin
Or you and your homies might be lined in chalk
I really hate to trip, but I gotta loc'-
As they grew I see myself in the pistol smoke, fool
I'm the kinda G the little homies wanna be like
On my knees in the night
Sayin prayers in the street light

Been spending most our lives living in the Banksta's Paradise

Keep spending most our lives living in the Banksta's Paradise
Keep spending most our lives living in the Banksta's Paradise

Thu, 01/20/2011 - 16:45 | 891082 SheepDog-One
SheepDog-One's picture

LOL pretty funny.

Thu, 01/20/2011 - 15:56 | 890825 The Axe
The Axe's picture

what happen??? Why couldn't  they just continue to shrink the product!!! 

Thu, 01/20/2011 - 16:02 | 890852 Sophist Economicus
Sophist Economicus's picture

Folks won't be able to find the stuff on the shelves without squinting

Thu, 01/20/2011 - 16:31 | 890993 SoCalBusted
SoCalBusted's picture

Shrink the product and increase the price - sounds like a win-win to me!

Thu, 01/20/2011 - 16:46 | 891087 andybev01
andybev01's picture

But we need fat children. They will make an excellent subtitute for veal in the days to come.

Thu, 01/20/2011 - 19:03 | 891622 andybev01
andybev01's picture

Ooo...junked for comedy?

I'm already redesigning a pre-school based on plans invented by Temple Grandin.

Thu, 01/20/2011 - 19:26 | 891700 goldsaver
goldsaver's picture

Sorry, dont eat veal. But there are some 16 year olds in the local HS I could go for.

I know, I know, very poor taste. My joke, I mean, not the 16 year olds.

Fri, 01/21/2011 - 09:45 | 892877 andybev01
andybev01's picture

Be careful; 16 will get you 10 to 20.

Thu, 01/20/2011 - 16:36 | 891004 Convolved Man
Convolved Man's picture

Consumers began noticing the package cost more than the product.  Stores will have to return to the bring your own container for the old general store package free product paradigm -- think customers with pillow cases and old mayonnaise jars forced to scoop and dip products from kegs, tubs, vats, bins, crates and barrels at the Ye Olde Costco.

Thu, 01/20/2011 - 17:57 | 891426 Misstrial
Misstrial's picture


T/Y for posting this -  made my day.


Thu, 01/20/2011 - 15:56 | 890830 flaunt
flaunt's picture

Well pretty soon they'll exclude everything from the CPI so they can claim everything is hunky-dory.  MOPE MOPE and more MOPE.


Thu, 01/20/2011 - 15:57 | 890833 Spitzer
Spitzer's picture

When food companies decrease the volume of a product without lowering the price, it doesn't show up as inflation.

Whats Mish been saying about commodity prices lately ?

I don't go to his blog since he pulled a Paul Krugman on Gonzo Laria.

Thu, 01/20/2011 - 15:57 | 890835 firstdivision
firstdivision's picture

This willprecipitate the downward movement in the markets. 

Thu, 01/20/2011 - 15:57 | 890837 orangedrinkandchips
orangedrinkandchips's picture

You dont need to eat that sugar shit anyway....a diet of the mind, body and wallet.

it works!

Thu, 01/20/2011 - 16:01 | 890849 Larry Darrell
Larry Darrell's picture

LOL........"stay away from unhealthy food choices" says the person who's handle is THE food staples list of most urban landscapes.

Thu, 01/20/2011 - 15:57 | 890838 orangedrinkandchips
orangedrinkandchips's picture

You dont need to eat that sugar shit anyway....a diet of the mind, body and wallet.

it works!

Thu, 01/20/2011 - 16:37 | 890844 plocequ1
plocequ1's picture

Amen brother. Eat German Bologna, The food of the Gods.. Its good ( And cheap). Made with real pork lips.

Thu, 01/20/2011 - 16:09 | 890850 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Soon organic food will be less expensive (nominally) than non organic food (peak oil).  I say nominally because organic food has twice the amount of anti-oxidents that foods sprayed with pesticides have, so even if an organic apple is twice the price of a non organic, the health benefits outweigh th price increase.

And by the by, economists only see what they want.  P x V?  Some other time, for now, they are busy using Chinese growth estimates.

Thu, 01/20/2011 - 16:17 | 890924 tmosley
tmosley's picture

That is incorrect.  The only thing organic food has less of is pesticides.  Pesticides do not affect the nutritional value one whit.

People often make the mistake of believing in sympathetic magic (

"Something that is bad touches something else, therefore the thing it touches is bad.  Don't define what "good" or "bad" is.  Just avoid it.  Non-organic food has pesticides, therefore it has less nutrients."  This is wrong.  One does not have an effect on the other.  Be careful to avoid this kind of thinking.  Think of causes and effects instead of "guilt by association".

It won't be organic farming that benefits from "peak oil" or economic collapse in general, but rather LOCAL farming will benefit.  A lot of organic food comes from China.  If the price of shipping goes up due to high fuel costs, then there will be a lot less organic crap on the shelves.  There will be a lot more stuff grown by local farmers, though.  It will also be picked riper than it would be otherwise, so it will actually taste better and be more nutritious.

Thu, 01/20/2011 - 16:29 | 890970 dwdollar
dwdollar's picture

What organic food comes from China?  I'm not familiar with anything substantial.  I think most truly organic food consumed in America is grown in America... thankfully.

Thu, 01/20/2011 - 16:48 | 891100 lemonobrien
lemonobrien's picture

Mexico and Argentina too. China does grow some, I've seen it; but don't trust it.

Thu, 01/20/2011 - 16:54 | 891134 SheepDog-One
SheepDog-One's picture

'Organic' in Mexico means fields irrigated with raw sewage. No shit.

Thu, 01/20/2011 - 17:02 | 891192 pazmaker
pazmaker's picture

Actually Sheep, plenty of shit!

Thu, 01/20/2011 - 19:29 | 891711 goldsaver
goldsaver's picture

dang, you beat me to it...

Thu, 01/20/2011 - 17:03 | 891125 Salinger
Salinger's picture

you are dreaming if you think your organic fruit and veggies come from a fertile valley somewhere in Oregon or similar. 


from wholefoods website

"No matter where a product is grown the same USDA standard is used to evaluate suppliers. Organic standards in China are no different than they are in Brazil, Turkey, Thailand or anywhere else."


from the NYT

U.S. Drops Inspector of Food in China

and check out this


Bottom line is if you do not know the folks who are supplying the organic products, you are relying on the same agency that oversees the factory meat, chicken and egg processors in flyover country and Big Agri in Cali, Tex and FLA 


Think about it for a moment, how can everyone from HEB to Vons to Trader Joes to Kroeger to Whole Foods supply organic veg and protein without going offshore


And not to diparage those companies but do you really think that the laborer in Xinjiang making 20 cents a day pisses in the factory bathroom facilities and then carefully washes his hands before heading back to the fields.  How about  his manager charged with improving yields who is saving for an iPhone and  was just paid a visit by the local Monsanto rep.

Thu, 01/20/2011 - 21:28 | 891991 Arkadaba
Arkadaba's picture

I agree and when I do buy organic, I try to buy local. I also make decisions on the individual food item. Organic milk is so much superior than the regular stuff and lasts longer so I will pay a premium for that. Same with meat. Here is an article that reverberated with my mindset on organic/non-organic shopping:

Thu, 01/20/2011 - 23:59 | 892343 chindit13
chindit13's picture

Standards the same in China, Brazil, Thailand, etc.?  Absolutely not.

Standards vary country to country, as does enforcement of the standards.  What passes for "organic" in Thailand definitely does not pass for organic in the US.  The chemicals that can or cannot be used, the time that must pass on land without using proscribed chemicals before the land is considered "clean", how a farmer must certify that he or she is meeting the standards, etc.

Given the litigious nature of American society, I smell a lawsuit coming against Whole Foods.  Any ambulance chasers out there looking for a case?

Thu, 01/20/2011 - 16:34 | 891018 cougar_w
cougar_w's picture

Wait. Did you just claim that eating pesticides is nutritionally neutral?

Thu, 01/20/2011 - 16:38 | 891040 tmosley
tmosley's picture

Do you claim that pesticides change the carbohydrate, fat, protein, or fiber content of vegetables?  You think they destroy the vitamins?  Or do they transmute the minerals?

Sympathetic magic!

Thu, 01/20/2011 - 16:59 | 891170 cougar_w
cougar_w's picture

Not change as such. But proper assimilation might suck wind when your liver is broken. And then there is always cancer and we all know what that does to appetite.

But yes, you are right. Nothing about the fats will be any different.

Thu, 01/20/2011 - 17:18 | 891284 AnAnonymous
AnAnonymous's picture

But of course. And it does not take a destroyed liver. A simple diarrhea is enough to lose much of the nutrients you ate.

Thu, 01/20/2011 - 17:11 | 891243 Doomer_Marx
Doomer_Marx's picture

The nutritional value isn't affected by pesticides but by fertilizer. The are a lot of micro-nutrients missing in massed produced mono crops because the petroleum based fertilizers don't include them and the soil is void of nutrients due to the style of farming. Our biochemistry is pretty complex and needs a large variety of micro and macro nutrients to function properly.

Thu, 01/20/2011 - 17:26 | 891323 hedgeless_horseman
hedgeless_horseman's picture

Vitamin Cottage, bitchezzz!!!!

For everyone else, there is Soylent Green.

Thu, 01/20/2011 - 18:10 | 891471 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Top of the ninth and it looks like the home team will bring in the relief pitcher for LH.  DoomerMarx gets the call...and he strikes out the side, game over folks.

Thu, 01/20/2011 - 18:23 | 891508 Green Leader
Green Leader's picture

@ Mosley:

You are incorrect also, equating USDA organic to what organic *should* be. USDA organic is a wishy-washy biased 'standard'.

Wish I could post my pictures here. You guys would see what my "highly organic" plants looked like. That was before the chemtrails attack...

Thu, 01/20/2011 - 17:05 | 891068 Salinger
Salinger's picture

I always thought your name was Lemon Hendrix but I digress, if your orgainc apples come from a little farm near Santa Rosa that your are familiar with, you're good to go. (just be sure to wash them well in case a bit of E.coli from the cow grazing nearby happened to touch it).   But beware the USDA and orgainc products and beware the USDA and imported Organic or any food  from China unless you count human excrement as natural fertilzer.

Thu, 01/20/2011 - 17:36 | 891361 painequalschange
painequalschange's picture

Just bought a 1/4 cow from Santa Rosa- organic, free range, best beef you've ever had - $5 a pound


Thu, 01/20/2011 - 17:19 | 891228 gaoptimize
gaoptimize's picture

They already passed a bill to take care of that potential competition...S.510

Thu, 01/20/2011 - 16:02 | 890854 Pants McPants
Pants McPants's picture

I don't know what these guys are talking about.  Ramen is still $0.25/pack plus the cost of heating.  But I don't pay utilities, so suck it.

Thu, 01/20/2011 - 16:50 | 891109 Bob
Bob's picture

Cook it with a couple chopped jalapenos (for green veg) and a clove of garlic, then beat in an egg, return to heat 60 seconds to cook.  If you're celebrating, dump in a can of tuna. 

Takes ramen to a whole nuther level. 

Thu, 01/20/2011 - 16:55 | 891146 SheepDog-One
SheepDog-One's picture

Yes but Ramen is so awful and worth only .01 cent per pack.

Thu, 01/20/2011 - 21:07 | 891933 ToddGak
ToddGak's picture

Used to be 6 for a dollar, so a 50% increase since then (that was a while ago...)

Fri, 01/21/2011 - 01:04 | 892489 chindit13
chindit13's picture

In rural SEAsia, ramen is a snack right out of the bag. Open it, take out the two packets, put the bag on the ground and step on it to break up the noodles, then sprinkle the seasoning powder into the bag. Crunchier than Doritos, and get a whole week's worth of palm oil in one serving.

Thu, 01/20/2011 - 16:04 | 890856 TheGreatPonzi
TheGreatPonzi's picture

Where did all the deflationists on this website go?

Thu, 01/20/2011 - 16:08 | 890880 Sophist Economicus
Sophist Economicus's picture

I still believe in wage and housing deflation - you change your mind?

Thu, 01/20/2011 - 16:28 | 890968 TheGreatPonzi
TheGreatPonzi's picture

I'm referring to the paper bugs deflationists, who actually think the USD will do better than PMs in the coming years, and that deflation will happen in every corner of goods and services.

It is obvious that first on a nominal and relative basis, then on a relative basis only - when high inflation would have become hyperinflation -, the deflation in housing will continue, and the deflation in wages will begin.

And for all the suckers who don't believe in hyperinflation, because it sounds too catastrophist or non-imaginable, I'd say that most suckers in the 1921 Germany felt that way too, just like most people didn't believe in the collapse of the USSR, or the revolution in Cuba.

Thu, 01/20/2011 - 16:31 | 890996 Sophist Economicus
Sophist Economicus's picture

My bad.   I'm in the 'fiat going up in flames' camp too....

Thu, 01/20/2011 - 16:26 | 890965 ssp2s
ssp2s's picture

Laughing at what happens next when non-SNAP consumers stop purchasing these products.

Wait.  Is anyone out there not on SNAP?

Thu, 01/20/2011 - 16:29 | 890980 What a mess_man
What a mess_man's picture

they be flying the white flag of surrender!

Thu, 01/20/2011 - 16:43 | 891071 SheepDog-One
SheepDog-One's picture

Well there IS also deflation...just try to sell your house!

Thu, 01/20/2011 - 16:02 | 890857 billwilson
billwilson's picture

I guess they can't shrink the packaging any further. Price increase is the last resort.



Thu, 01/20/2011 - 16:05 | 890868 Dr. Richard Head
Dr. Richard Head's picture

Inflation?  There is no inflation.  You guys are conspiracy monkeys.  Plus no need for apples when we have AAPL.  Food?!?!?!  I don't need no stinkin food.

Thu, 01/20/2011 - 16:06 | 890874 Sophist Economicus
Sophist Economicus's picture

Here we go.   This is what is wrong with wonks mucking in free markets.  Everybody is starting to ramp up prices right when the specs are getting spooked out of equities and commodities WHILE wages are stagnant for most folks.

Double dip, here we come...

Thu, 01/20/2011 - 16:06 | 890875 TruthInSunshine
TruthInSunshine's picture

Safeway has gruel for $6.99/pound.'s what's gonna' be for dinner.

Ben 'B52' Bernank's Gruel. Ask for it by name at your grocer's deli counter.

Thu, 01/20/2011 - 16:29 | 890979 augmister
augmister's picture

Porridge is cheaper... I buy a couple of pounds of steel cut oats at Whole Foods for less tan 5 bucks, a little milk, pat of butter and BAM!   The caviar of grains!  Anyone who eats out of a box or can is looking for big calories and pre-diabetic condition... so you want so Gubbermint health care?  Whazzat?

Thu, 01/20/2011 - 19:42 | 891753 goldsaver
goldsaver's picture

Got you beat. I buy 50Lb bags of oat groats at my local feed store for $20 a bag. Store in a couple of 5 gallon buckets and dispense at will. I did notice that rice went up from $16 for 50Lbs to $19.50 las time I was at Sam's (about 15% increase). Picked up a bag anyway.

Thu, 01/20/2011 - 20:53 | 891897 TexasAggie
TexasAggie's picture

The percent increase is (19.50-16)/16 and is .2187 or 21.87%

Thu, 01/20/2011 - 16:30 | 890988 Pladizow
Pladizow's picture

Please Sir.....I want some more.

Thu, 01/20/2011 - 19:33 | 891720 RockyRacoon
RockyRacoon's picture

Looks like you've had plenty already.

Maybe you should share!

Thu, 01/20/2011 - 16:07 | 890876 buzzsaw99
buzzsaw99's picture

I don't buy that double-pre-packaged crap anyway.

Thu, 01/20/2011 - 16:10 | 890893 DonnieD
DonnieD's picture

Don't worry, it's coming to a produce section near you.

Thu, 01/20/2011 - 17:25 | 891316 buzzsaw99
buzzsaw99's picture

It does not matter how high groceries or gasoline go. I have infinite room to cut back in other areas. Other parts of the economy will suffer, not me.

Thu, 01/20/2011 - 16:08 | 890882 Sausagemaker
Sausagemaker's picture

My local grocers started using the "boiled frog" technique on pricing in mid-December. Every week they turn up the heat a little more. 

Ex> The eggs I buy were $2.29/doz in November. The went to $2.39 in early December, them $2.79 by Christmas. This week they are $2.99.

It feels like they got more aggressive across the board after New Year's though. 

Thu, 01/20/2011 - 16:19 | 890933 pazmaker
pazmaker's picture

sausage I sell my eggs for $2.00 a doz  my hens lay more then we can eat nice large free range brown eggs... I'm not gonna raise the price though my friends and neighbors that don't have their own hens buy them.

Thu, 01/20/2011 - 16:32 | 891005 augmister
augmister's picture

They just legalized six chickens in every yard in my source of protein now that they are taxing the hell out of the fishing licenses, which use to be a great source of FREE NE saltwater fishes....

Thu, 01/20/2011 - 16:39 | 891035 cowdiddly
cowdiddly's picture

Yes but that 50lb sack of chicken feed has most surely going up. But at least you get those nice dark orange yolks that stand up in a pan like a hard on instead of those pale yellow drippy azz corporate eggs where the chickens only receive enough grain for a maintenance diet 

Thu, 01/20/2011 - 16:44 | 891061 pazmaker
pazmaker's picture

yeah the feed has gone up... i had one person ask me what was wrong with the yolks being dark orange and thick...hahaha  I told her nothing is wrong with them that is how they are suppose to be!  the ones you get at walmart are "wrong"

I do get some feed from a warehouse that throws out broken bags(i have to admit I dumpster dive) so sometimes I get it for free!!

Thu, 01/20/2011 - 18:22 | 891514 krispkritter
krispkritter's picture

Yeah, feed has gone up a buck or so in the last year but if you feed them nothing but that and they don't have access to forage you're getting the same egg you can buy in the store. I got my own after seeing local 'organic eggs' where the hens are in cages and fed bagged feed, how is that different than a production farm? Mine get grass and whatever they scratch up plus scraps(watermelon disappears like magic) and the feed is only a supplement plus some crushed oyster shells. I get 5 eggs a day off 5 hens(wish the girls in HS had put out with that regularity) so I sell mine to neighbors for $3dz since they are $5 in the stores. I also buy oats at the feed store and plant it like grass for them. BTW, feed stores have steel-cut and rolled oats in bulk too. Same crap you get in the stores just in big bags. Put it in ziplocs and that big bag sets you back just $14 in most places. Kicking myself for enriching lawyers in past years and not getting my PM's and other essentials in place sooner. But I can grow, brew, distill, and 'culture' more than I need so I may just be in a better situation than most... 

Thu, 01/20/2011 - 19:36 | 891735 RockyRacoon
RockyRacoon's picture

Didja know that if you feed your chickens ground lobster shell they'll produce red yolks?

Now that'll brighten up your breakfast.

Thu, 01/20/2011 - 21:39 | 892034 Hulk
Hulk's picture

Had a sitting hen hatch 8 chicks, but since she only had 6 tits,  had to get rid of 2 of the chicks to ensure survival of the other 6...

Thu, 01/20/2011 - 16:22 | 890944 AR15AU
AR15AU's picture

I suspect many food retailers had contracts in place that may have expired at the end of the year.

For example, I would track the price of Wal Mart canned chicken. Over the entire year, it never budged from $2.09, even tho oil prices and feed prices etc all fluctuated.  ie, some kind of contract in place.

Thu, 01/20/2011 - 16:33 | 891011 What a mess_man
What a mess_man's picture

WTF is "Wal Mart canned chicken" ???

Thu, 01/20/2011 - 16:40 | 891055 tmosley
tmosley's picture

What part of the phrase did you fail to understand?

OMG store brands!

Thu, 01/20/2011 - 16:33 | 891013 augmister
augmister's picture

Idiot... that was the SAME can of chicken that NEVER moved off the shelf.  Next time you do a survey, mark the can with a marking crayon....where do we get posters like this one????

Thu, 01/20/2011 - 16:55 | 891142 andybev01
andybev01's picture

Please tell me that by "canned chicken" you are referring to a product like tuna fish in a can and not some hideous carcass stuffed into a can.

Thu, 01/20/2011 - 16:57 | 891158 SheepDog-One
SheepDog-One's picture

No its a chicken carcass, stuffed into a can.

Thu, 01/20/2011 - 17:13 | 891233 andybev01
andybev01's picture


I suppose when even the idea of a supermarket becomes legend, it would sound tasty.

Either that or a hollow point slug.

I looked it up and how do these folks think that adding the word 'chunks' to the label makes this stuff appetizing?

Do NOT follow this link or you will be banned from the site!