FOOD FIGHT

Food fights can be fun.

Nothing says I love you better than a pie in the face. Who hasn't reveled in the idea of touching off a lunch room melee by flipping a flank steak at an innocent bystander or playfully sending plate of spaghetti, with meatballs, airborne?

Who can forget epic slapstick brawls by everyone from the Three Stooges to Marx Brothers. Even today, when in doubt, modern comedy writers fall back on the old reliable. Some things are always funny.

Funk and Wagnalls, the authority on all manner of things wild and wacky, defines a food fight as “a spontaneous form of chaotic collective behavior in which food is thrown around a room, usually a cafeteria, in the manner of projectiles.” In a nod to this comic tradition, Messrs. Funk and Wagnall add, “it is usually started by one person, sometimes by accident.”

Food fights are woven into the fabric of several western cultures. For centuries, the Spanish have had their “Tomatina” and the Italians the “Battallia degli Aranci.” In the Spanish version, citizens young and old, rich and poor, gather in glee to hurl tomatoes at one another. Not to be outdone their Mediterranean cousins, the Italians stage mock battles in which oranges replace grenades as the weapon of choice.

In the wake of the storms and mid-west floods, however, the fight over food has taken on new, and less comic dimensions. With energy prices at all time highs and a growing percentage of corn already committed to ethanol production (nearly 30%), the price of grains has soared. After U.S. Midwest flooding damaged an estimated three million acres, corn, wheat and soybeans are trading at or near new records. As the growing season progresses, and the reality of crop damage sets in, global food inflation will likely accelerate.

From a global perspective, this is the “perfect storm.”

According to USDA, 2007/08 will mark the seventh year out of the past eight in which global grain production has fallen short of demand. This consistent shortfall has cut supplies in half-down from a 115-day supply in 1999/00 to the current level of 53 days.

In a recently released report on global conditions, the Department said “the world is consistently failing to produce as much grain as it uses." Analysts said, however, that the current low supply levels are not just the result of a transient weather event or an isolated production problems. Rather, low supplies are the result of a “persistent draw-down trend."

For America's growers, even those whose acreage currently resembles one of the Great Lakes, this is a boon. For worldwide consumers, however, including those in the U.S., food prices are spinning out of control.

To make matters worse, as the world has become more prosperous, more of the world wants to eat like Americans. This means more meat. It should come as no surprise that the fastest growing restaurants in both China and India are MacDonalds and Kentucky Fried Chicken.

More meat means more livestock feed. Most livestock are fattened on corn-based feed. This year alone, rising feed prices have pushed up the costs of meat and poultry in the U.S. by more than 40%. Pretty soon, the cost of the buns on your Big Mac will rival price points on its shrinking patties.

As Congress begins to tackle the causes and cures of global warming, the action focuses on gas-guzzling vehicles and coal-fired power plants, not on lowly bovines.
Yet livestock are a major emitter of greenhouse gases that cause climate change. And as meat becomes a growing mainstay of human diet around the world, changing what we eat may prove as hard as changing what we drive.

It's not just the well-known and frequently joked-about flatulence and manure of grass-chewing cattle that's the problem. A recent report by the Food and Agriculture Organization of the United Nations (FAO) said that land-use changes, especially deforestation to expand pastures and to create arable land for feed crops, is a big part. So is the use of energy to produce fertilizers, to run the slaughterhouses and meat-processing plants, and to pump water.

Believe or not, the international agency concluded that livestock are responsible for 18 percent of greenhouse-gas emissions as measured in carbon dioxide equivalent. Altogether, if their estimates are correct, that's more than the emissions caused by transportation.

Whew. I'll take my pie in the face now.



To learn more about my market recommendations, visit my website at:www.globewestfinancial.com.