The warm weather in the winter months gave farmers hope for a great crop production this year, but a crippling U.S. drought now covers around 60% of the continental United States. The water shortage has killed crops, pushed corn prices higher, and will eventually make its way to your local store shelves.
But according to famed analyst Jeremy Grantham, the looming U.S. food price increase in 2013 is just the beginning, and the reasons go far beyond the current drought.
Grantham, the founder of Boston-based institutional money manager GMO LLC, in his July 2012 quarterly letter to investors wrote a report entitled, "Welcome to Dystopia! Entering a long-term and politically dangerous food crisis."
Grantham explained that rising U.S. food prices have more to do with soaring population growth than this summer's water shortage.
"We are five years into a severe global food crisis," Grantham wrote, "that is very unlikely to go away."
U.S. Food Prices Rise with Population
Grantham explained that as the world's population rises, global demand for resources will rise exponentially; it's a mathematical certainty.
"The general assumption is that we need to increase food production by 60% to 100% by 2050 to feed at least a modest sufficiency of calories to all 9 billion+ people, plus to deliver much more meat to the rapidly increasing middle classes of the developing world," wrote Grantham.
Even today, the average American is responsible for 32 metric tons worth of food, water, minerals, and energy from the environment every single year - and that's just one person.
"Even if we could produce enough food globally to feed everyone satisfactorily the continued steady rise in the cost of inputs will mean increasing numbers will not be able to afford the food we produce. This is a key point that is often missed," Grantham said.
Over time, Grantham said food shortages "will threaten poor countries with increased malnutrition and starvation and even collapse."
So the long summer drought which currently consumes almost 65% of the contiguous U.S. states is just a preview of what can happen as wheat and corn crop shortages escalate in severity.
Grantham warned, "Any price increase from here may cause social collapse and a wave of immigration on a scale never before experienced in peacetime. Another doubling in grain prices would be catastrophic."
Grantham's predictions have been discussed for years. That's why some of our Money Map Press experts joined a team of researchers to look into the effects of global population growth on our resources.
Turns out, Grantham is dead on.
"We've uncovered a catastrophic pattern in our nation's food system," said Chris Martenson, an economic expert and one of the team's members. "One we believe could soon hasten a world food crisis -a chain of events that could lead to massive food inflation, even riots."
The pattern Martenson identified affects the entire global economic system. It's eerily similar, he explains, to the kind of pattern you see in a pyramid scheme, one that escalates exponentially before it collapses - with little notice.
For a look at this pattern that could crush Americans, click here.
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