2010 Good Time to Become Vegetarian

Even without saying it in so many words, some leading US economists are predicting 2010 to be a good time to become a vegetarian.  What they're actually saying is that the pace of food inflation will double next year and go even higher for protein-based commodities such as beef, chicken, and pork.  Milk and dairy prices are expected to soar, too.

What's driving this trend is the rapidly rising cost of livestock feed in the past few years.  Producers have culled their herds to minimize their expenditures on feed.  There are simply fewer food animals being taken to market these days, with no expectation of improvement in the coming year.  This reduction in supply is expected to continue for at least the next several years.

Swinging in the opposite economic direction is demand for these commodities by consumers in the US and abroad.  Many experts believe the prolonged economic recession is bottoming out and consumer confidence is returning.  Once-worried consumers are filling their shopping carts higher at the supermarket and many of them plan to buy more meats and dairy products than they've felt comfortable buying lately.

Mike Swanson, a senior economist for Wells Fargo & Company, predicts food prices jumping by as much as 6% in the coming year, a prediction that tops that of the US Department of Agriculture (USDA), which predicts an increase of 3% to 4%.  Swanson says demand for corn, a primary livestock feed, is skyrocketing, thanks to its value in ethanol production.  The demands of both industries - ethanol and livestock feed - have raised corn values higher than livestock values.

At the Goldman Sachs Group Inc., economists predict cattle futures for next year will increase more than they've done since 1978; hog futures will be their highest in six years.  Goldman's Jeffrey Currie warns that "economic recovery suggests rising meat demand amid tighter supplies."

Bill Lapp, of Advanced Economic Solutions LLC, a commodities research firm based in Omaha, Nebraska, predicts a 20% rise in diary prices in coming months, topping the inflationary rate for all other food commodities.  Decreased livestock production and increased costs of feed, compounded with higher fuel costs, will undoubtedly affect the American consumer.  Lapp predicts restaurants and food manufacturers will be hit hardest by this inflationary trend.

I predict it will be the consumer who will actually be hit hardest of all.  Go vegetarian.