Why and How Americans Are Stockpiling Food and Using Tax Rebate Checks to Hoard Rice, Oil and More

Just the other day, I heard about a rice shortage and rumors of some stores limiting rice purchases. I called our local Sams Club and asked the manager if customers were being limited in the amount of rice they could purchase. The answer? Yes. Each member could buy only four bags of rice or even less, depending on the type of rice purchased. At our local grocery store, the larger sized bags of rice were gone but the small boxes of Uncle Ben's rice and packaged rice mixes were still available.

Then I heard a neighbor mention how she was stocking up on even more basic food supplies. She showed me a pantry with shelves filled with containers of cooking oil! My mother, a woman who'd survived the Great Depression, hasn't started stockpiling food, but did alert me to a recent article in none other than The Wall Street Journal, where a suggestion was made that it might be time for Americans to consider stockpiling food. You can see that information here: online.wsj.com/article/SB120881517227532621.html

Even the government seems to be getting in on the action and President Bush seems to be encouraging Americans to spend their tax rebates on gasoline and food. That information can be seen here: news.yahoo.com/s/ap/20080425/ap_on_go_pr_wh/bush_economy . A case was made by some, including Semator Charles Shumer, Chairman of the Joint Economic Committee of Congress, that the rising cost of gas would take a bite out of most people's finances - one that would use up almost their entire stimulus check.

The rest? It could well go toward higher food prices. Of course, just as Forever Stamps hold their value if postage goes up, some people believe that stockpiling food now could be a hedge against rising food prices. With cereal prices rising 8% a year and eggs soaring an astronomical 30% in one year, it is easy to see why hoarding food may make sense.

So why are some people stockpiling food now? What fuels their actions? Here are some of the top reasons as well as pros and cons when it comes to stockpiling food:

Reason one: Stockpiling Food as a way to guard against inflation

Such staples as rice, milk, cheese, bananas, eggs...even peanut butter...have soared in cost over the last year. That is a reality. By building a food pantry with nearly a year's worth of nonperishable goods on hand, one could certainly make a case for saving some money on food costs, something that is a major part of most people's budget.

One family has been doing that for years. The Simpson family actually spent years building up enough food to live for years. They've also watched the value of their supplies increase, avoiding the soaring prices of flour and rice - year after year. You can read about them here: www.localnews8.com/Global/story.asp

The pros: By buying in bulk, people save money during a recession. Also, everyone has to eat so when everything else can be cut, food isn't one of those items.

The cons: If food shortage become a reality, prices may go up even more. Will those who hoard food actually help themselves and the economy - or hurt it even more? Also, is panic really a wise choice or a knee-jerk reaction? How much can people use before food expires or goes bad? Yes, some countries have food shortages but does that mean the same will be true of the United States?

Perhaps it is time to do some research and make an informed decision, rather than one built from panic and watching what the person next door does.

Reason two: stockpiling food as a wise investment move.

When a recession hits, there is a tendency for some to get out of the stock market and info more conservative, secure investments. If you compare rates at sites such as Bankrate at www.bankrate.com/ you'll quickly see that conservative investments such as CDs (certificates of deposit) also have relatively low returns. If you'd invested that same money in food, you would have saved big this year, outperforming the return on many conservative investments.

The pros: stockpiling food as an investment strategy not only stretches your food budget but has a better return than most other conservative investments and even some stocks. According to government data and that Wall Street Journal article (see above) t food inflation for the average American household is now running at 4.5% a year. In some "sectors" of food (bananas, peanut butter, dairy products) the prices have increased more than that.

Of course, it isn't so easy to keep a huge supply of eggs on hand. They've gone up 30%, as noted before.

The cons: investing in food may work in the short term but does it help the economy in the long run? One wonders if the savings in food will be balanced by spending in other parts of the economy. Also, for those who can't afford to stockpile food, there could be worsening economic woes for the country. Stockpiling food as an investment strategy is not a diversified plan and won't offset other economic blows, including the rising price of gasoline.

Reason three; Stockpiling food simply to survive or for religious reasons

Yes, everyone has to eat and by having food on hand, one isn't likely to starve. Don't have milk? You can substitute dried milk. Have bottled water and you're good to go. Many Mormons have advocated having at least a year's supply of food on hand. That info is available at many Mormon sites online.

The pros: You might not go hungry.

The cons: this is just one challenge that would be faced in a recession. Having food on hand does nothing to ensure quality health care, make sure you have enough money to pay the electric bill or handle other challenges faced by a community with a tight economy. If you need the money to help pay for son or daughter's college education, pay the mortgage or other expenses, it may not be wise to overspend on food and leave yourself depleted in another area.

I admit I was shocked to read that article in the Wall Street Journal and learning that stockpiling food may be a better investment than a one year CD (certificate of deposit). I've been reading everything I can on the subject since then and hope to keep up with people's feelings on this subject as time goes on. It seems surreal to think that some people are seriously considering this option.