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Hurricane Katrina - The Aftermath


by: Roon Williams

Now that Hurricane Katrina is nothing more than a lot of regret, water and destruction, the emphasis must be placed on what happens next.  An event like Katrina brings out the best in most folks and unfortunately, the worst in others.  However, once the immediate needs are understood (and we aren't there even yet), we have to take a look at the next implications.

Food shortages and inflation

It's been said that we live in a world economy, and we are just about to realize that in it's full force.  When you stop to think about it, very little of what you consume is grown and packaged close to where you live.  And much more than you think is actually imported into the USA.  

When it comes to Hurricane Katrina, people won't learn for some time how much this will add to the grocery bill.  Here's why:

  • It could cost as much as 3 times the fuel cost to deliver food to your grocery store.  

  • With New Orleans shut down, ships coming from Central America and South America are going to have to ship it farther.

  • Billions of dollars worth of goods and products were destroyed in New Orleans.  Ships bringing in goods store them and disperse them from New Orleans warehouses.  If these products weren't looted, they are completely soaked and useless.  

  • Most of the crops of Southern Louisiana, Mississippi, and Alabama have been destroyed.  The media hasn't even considered these yet.  

So what foods will be affected and what won't? All food will be affected to some degree, but some more than others.  Foods that are produced in the USA, in good supply, and especially those that are produced near you are least affected.  Those that are imported and/or shipped from a long way away or where there are shortages will be most affected.  Those that are produced heavily in Louisiana and Mississippi will be heavily affected.  

Foods and products to stock up on:

Sugar - produced in southern Louisiana (36.7% of the US production and over a third of a billion dollars worth of it), expect sugar and products with lots of sugar to go up big time.  Keep in mind that this will also affect sugarless products as well as they are alternatives to sugar.  Sugar foods most affected:

  • Sugar
  • Brown and powdered sugar
  • Molasses
  • Jellies, jams and preserves
  • Syrups 
  • Chocolate chips
  • Cake mixes and frostings
  • Puddings
  • Candy, marshmallows, choc. chips
  • Soda
  • Splenda

Rice and rice products - Louisiana is the 3rd largest producer of rice in the US, producing over $100 million worth of the stuff.  Products most affected:

  • Rice
  • Rice cereals including baby food
  • Rice flours
  • Rice casserole mixes
  • Rice pastas
  • Certain kinds of starches
  • Also expect higher costs to put extra demand and possibly bigger price tags on alternative products made from wheat and oats.

Cotton products - While Louisiana is only number 7 in the nation for cotton exports, that still amounts to a lot of product.  Also factor in Mississippi and Alabama that have also lost most of their cotton crops and you can probably figure at least 30% of the national crop has been destroyed.  Products most affected:

  • Cotton clothing
  • Linens and towels

Liquid goods and products packed in liquid that must travel a long distance from where you live will see significant price increases.  Liquid is one of the most costly things to transport because it weighs so much for the amount of space that it takes up.  Soft drinks generally don't have to travel too far so transportation might not be a huge factor, but sugar costs will probably drive the costs up.  Other products most affected:

  • Juices in liquid form
  • Milk - if you don't live near dairy areas
  • Canned fruits and vegetables (packed in liquids)

Long distance products - Consider where you live and what must be transported a long way to get to you.  For example, if you live in Idaho, Wisconsin, or Delaware, potatoes probably won't go up much, but potatoes are heavy and costly to transport.  Products most affected that you should consider on an individual basis:

  • Coffee - supposedly there are tons of coffee that are destroyed.  Similar shortages in the past have driven the cost of coffee up more than 100%.

  • Bananas - obviously you cannot store these long term, but enjoy them before they become expensive

  • Pineapple - same thing though the canned version can obviously be stored

  • Meat - in addition to the cost of transportation to some areas, anticipate that the cost of feed will also be going up, making beef and pork more expensive.

  • Potatoes

  • Cheese

Products that contain a lot of air and are relatively cheap.  While you can pack an awful lot of household paper products onto a truck, the retail price per square foot is pretty low.  For instance, a case (36 pack) of toilet paper costs about $15 at Costco or Sam's.  Yet the same square footage required to ship this product if converted to cookies for example, would be about $150 at retail.  While each square foot costs about the same to ship in raw dollars, the increase in percent on the toilet paper would be 10 times that of the cookies.  Or to put it simply, the price of bulky light and inexpensive products will go up.  Products most affected:

  • Toilet paper
  • Paper towels
  • Kleenex
  • Chips and other light snacks
  • Crackers

Now for the good news

Economies always recover and where there are shortages and high prices, others will come along and fill the gap to make those expensive products.  That of course, drives prices back down.  Look for higher prices this winter and probably until spring.

Also, because of a lack of coverage of this till this point, prices have not gone up a bit in most parts of the country.  This means that you can easily start to stock up on items that you need the most.  If you buy non-perishables now, in the long run, you will have saved money and/or be able to still have items that you otherwise would not be able to afford when prices go up.

The trick to making this work

If you can afford to do so and then keep it in storage, buy your non-perishables and then continue to buy and consume regularly until you see prices go up.  Then while others are buying the expensive newer stuff, that is when you start consuming your stash.  You will be eating food at the old prices while others are paying the price for goods in short supply.

 

 

Stat Sources: Class-brain

 

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