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Food Shortages In 2012: What Is Likely And What To Do
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Food Shortages In 2012: What is Likely And What To Do

Since Americans have always enjoyed a seemingly infinite variety and endless supply of food at the grocery stores, most of the time when the subject of food shortages in America comes up people dismiss the issue out of hand. However, with all of the concern about 2012 now and the economy in turmoil, discussions of food shortages are getting more of a hearing.

It is interesting to note that there can be plenty of food for everyone to go around and yet we can still have food shortages. As a matter of fact, most of the food shortages around the world today have nothing to do with supply, but rather are caused by either economic issues or civil wars.

The Most Likely Scenario for American Food Shortages in 2012

The average item on the grocery store shelf has traveled about 1,500 miles to get there. This long distance between producer and the store is referred to as the supply chain. It begins with the farmer who grows the food and includes the factory where it is processed, the transportation network and the distribution network that spreads across the country.

The supply chain is as vulnerable as it is long. If the price of fuel skyrockets due to a war in the Middle East, every player throughout the supply chain is affected as their costs also skyrocket. At each step along the way, it is about whether or not it is profitable to continue moving the food along to the next player.

During the Great Depression, there were many dairy farmers who, instead of taking their milk to market, simply poured it out on the ground. Prices had fallen so drastically due to the Depression that it didn't pay for the farmers to use the time and gasoline to drive to market, as the price they were receiving for their product was so low.

Deflation (Prices Falling) or Inflation (Prices Rising)

A similar thing can happen when inflation is so high as to be called "hyperinflation" like was experienced in Germany before World War 2. When a producer or supplier believes that the price he can get will be much greater tomorrow, he has a tendency to start holding onto his stock, causing a food shortage.

When inflationary panic sets in, it's not only the "supply" end that starts to dry up. The "demand" starts to increase as people want to stock up before prices increase and very soon a herd mentality develops and there are runs on supermarkets.

Most supermarkets have only a 3 day supply of food on hand. Ask any grocery manager and they will tell you that many of their suppliers make daily deliveries. It wouldn't take long for a store's shelves to empty if deliveries were slowed, not to mention if a panic developed and people turned into the crazed "Black Friday Shoppers." That there could be food riots in America in 2012 is certainly becoming more of a risk.

What Would Start It All?

The most likely scenarios revolve around an oil crisis or an economic panic caused by numerous European countries defaulting on their debts, impacting US banks. With the US government borrowing 40 cents of every dollar it spends and owing $15 trillion already, many economists are believing that the clock is ticking. Both the collapse of the housing market and the 2008 bankruptcy of Lehman Brothers caught the country by surprise. The precedent is certainly set that a crisis could set off a massive food shortage and take the country by surprise.

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