[kandikid82]

Load Up the Pantry
by Brett Arends
Wednesday, April 23, 2008
provided by

I don't want to alarm anybody, but maybe it's time for Americans to start stockpiling food.

No, this is not a drill.

You've seen the TV footage of food riots in parts of the developing world. Yes, they're a long way away from the U.S. But most foodstuffs operate in a global market. When the cost of wheat soars in Asia, it will do the same here.

Reality: Food prices are already rising here much faster than the returns you are likely to get from keeping your money in a bank or money-market fund. And there are very good reasons to believe prices on the shelves are about to start rising a lot faster.

"Load up the pantry," says Manu Daftary, one of Wall Street's top investors and the manager of the Quaker Strategic Growth mutual fund. "I think prices are going higher. People are too complacent. They think it isn't going to happen here. But I don't know how the food companies can absorb higher costs." (Full disclosure: I am an investor in Quaker Strategic)

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.

Sooner or later, the food companies are going to have to pass those costs on. Kraft saw its raw material costs soar by about $1.25 billion last year, squeezing profit margins. The company recently warned that higher prices are here to stay. Last month the chief executive of General Mills, Kendall Powell, made a similar point.

The main reason for rising prices, of course, is the surge in demand from China and India. Hundreds of millions of people are joining the middle class each year, and that means they want to eat more and better food.

A secondary reason has been the growing demand for ethanol as a fuel additive. That's soaking up some of the corn supply.

You can't easily stock up on perishables like eggs or milk. But other products will keep. Among them: Dried pasta, rice, cereals, and cans of everything from tuna fish to fruit and vegetables. The kicker: You should also save money by buying them in bulk.

If this seems a stretch, ponder this: The emerging bull market in agricultural products is following in the footsteps of oil. A few years ago, many Americans hoped $2 gas was a temporary spike. Now it's the rosy memory of a bygone age.

The good news is that it's easier to store Cap'n Crunch or cans of Starkist in your home than it is to store lots of gasoline. Safer, too.

Write to Brett Arends at brett.arends@wsj.com

Copyrighted, Dow Jones & Company, Inc. All rights reserved.

[skyesmom]

Good article but isn't that what our stockpiles are all about anyway?

[lesliec]

I think I'm headed to SAM's today to stock that good ol Deep Freeze that is more than half empty...

[lou12341]

Good article but I can't stockpile anymore...everything is FULL!

[OldTinGrl]

This stockpiling newbie is working on it. Hope I can get a pretty good stash before things go higher.

[CARRIEMB2]

I'm trying, I'm trying!

[Carina]

I was about to post the same story. My grandfather used to stockpile coffee, canned goods, etc., so its not a new concept to me. I hate running out and there is no harm getting a good deal and storing it until you need it. I have 2 huge shelves dedicated to food in my store room plus one shelf dedicated to cleaning products, paper, etc. If its cheap I want to stockpile!

[wendy1214]

I tell you, I just imagine what a "average" person's food bill is these days, and don't know our budget would even be able to support it. We aren't well off, and we aren't in the poor house, but I shop the way I do so we can have a few extras. I just can't see spending $400 a month on food. I am so grateful now to shop the way I do- especially in light of rising costs!

[Kmchamplin]

I think more and more people are seeing that they need to stock up while it is on sale.

[CharlieGirl]

but isn't it better for us to stockpile sale prices then run out making a special trip to pay full price for something?! I love stockpiling, and I know it's harder for those who don't have the room, some of mine is even starting to overflow to that garage but you can always box stuff up that you might not need right away. That's what I did with all my wipes, I left some out but then packaged the rest in smaller boxes so I can grab a box at a time once I deplete whats out.

[gagesmommy]

I think we won't have to many problems with this other than people buying more Sunday papers to get the Q's but I really think that will fade again soon. To many people think its a waste of time so once they add the higher costs into their budget it will go back to normal. I think things that we should wait for sales and such. My stockpile isn't much but even if we can't get things for free anymore I bet we could still get them for a dollar or so. JMO

[southernbird]

I'm way older than most of you, and my mom always stockpiled. We lived in the north and snowstorms were frequent visitors. I now live in the south an have stockpiled because of hurricanes now I have another reason, the economy. I feel it is better to be prepared than not. Maybe things will not get as bad I think, but I'm not taking any chances.

[patricia1018]

Thank you OP!
this actually enables my addiction!
I am addicted to stockpileing, some say hoarding, but I am neat and clean, I just can't help myself!!!
Now my addiction is justified!!!!!!!!wooooohooooooooooooo
my motto:
if its free it's for me!!!!!!!

[kandikid82]

Patricia - I feel the same way. I want to post this on my front door for all the people who think I'm nuts for stockpiling.

[angel nee nee]

eggs and milk can be frozen easily.
Eggs. crack them open and beat them and freeze in container. in freezer.

Milk. open it, pour a litle out, and freeze it.

[jilah7]

its true about prices going up though. We own a pizza restaurant and our wheat prices have gone up 36% in the past 4 weeks. Our cheese prices have more than doubled. We have to pay fuel surcharges to each of our distributors now and I am sure retail stores do too. I can only say, I am stockpiling all I can!!!!

[staviles]

I saw this same story on the Today show on Friday and the Mad Money guy (kramer something or another) was saying that stockpiling was foolish..but you now what...he can say that..he is a millionaire! I personally have a great stockpile of both food and toiletries (at least enough for a year) and usually only have to buy meat, milk and eggs, but as Angel said, even those things I might start stockpiling on..especially when WAGS has their dozen eggs for $1.50 as opposed to $4.19/dozen at the grocery store!! Great article, thanks for posting!