A 'Growing' Problem by Jennifer Barry, GlobalAssetStrategist.com December 5, 2008
A Shrinking Pantry
Even with an ample harvest, I fear for a serious food crisis in 2009 if the credit markets are not unfrozen. The Baltic Dry Index, which measures the global cost of shipping commodities, has fallen a precipitous 94% this year to the lowest level since 1987. While some of this decline can be explained by decreased demand and larger fleet capacity, the real issue is the severe credit contraction. Many exporters can’t get the letters of credit necessary to finance their commodity cargoes. Banks are only issuing credit to their best customers, and even then, the interest rates have soared. Most importing countries are dealing with the frozen drybulk shipping markets by eating through their stockpiles, a situation which is unsustainable. Depleted stores coupled with a poor local harvest could lead to famine conditions in the most impoverished countries next year.
I want to encourage readers to again stock up on nonperishable foods. In most countries, buying extra food in May when I first recommended it would have saved on grocery bills. You don’t have to buy anything exotic, just purchase extra supplies of the foods you normally eat, especially if you can take advantage of a sale.
Even if you live in a prosperous country, the ongoing credit freeze could make your favorite items expensive or difficult to get. Most Icelanders didn’t worry about getting their basic needs met during the boom. They never expected that a crisis would make foreigners reject their currency and cut credit to importers. Reports indicate the island only has three to five weeks of food left, a scary prospect. After learning of the crisis in Iceland, I think that storing some emergency food and water is an essential investment in your health and peace of mind.
