Food price woes globally - LONG READ

[queen]

Interesting read particualrly with all the price increses in NZ lately

The United Nations' Food and Agriculture Organization (FAO) said that world cereal production may jump a record 2.6% this year as farmers boost plantings.

In other words, supply is fine.

Except ... wait a minute ... what's that other report I read last month? The one that said world cereal demand is growing at 3% a year.

Today, I'll explain why this seemingly insignificant gap between supply and demand scares the bejeezus out of me, and how you can protect yourself.

The gap is only four-tenths of a percent. What could possibly go wrong, you ask?

Well, for starters ...

The World's Food Supplies Have Collapsed ...

Worldwide stockpiles of cereals (wheat, corn, etc.) are expected to fall to a 25-year-low of 405 million tonnes in 2008. That's down 21 million tonnes, or 5%, from their already reduced level last year.

U.S. wheat stockpiles are at a 62-year low, even though farmers are planting from fence-to-fence. And with the U.S. dollar falling fast, foreign buyers are lining up to scoop up as much of Uncle Sam's grain as they can carry away. Wheat recently soared to the highest price in 28 years.

Meanwhile rice, a staple food for three billion people, is becoming increasingly scarce. World stores of rice have shrunk from 130 million tons eight years ago to today's stockpile of 72 million tons — enough for only 17% of annual global demand. Result — the price of rice is up 70% in the past year.

And as for corn — well, more and more of that is used for ethanol. The price of corn is up over 70% in the past year and has more than doubled in the past two years.

So to summarize — stockpiles are at record lows. The supply on hand can be measured in days! And growth in production can't keep up with growth demand.

Now, let me ask you this question ...

What If Something Goes Wrong?

What if the increasingly freaky weather the world has been enduring causes droughts on one side of the world and floods on the other? What if there's blight or some other major crop failure?

You can see why I believe we are one bad harvest away from a serious global food crisis!

People will put up with a lot, but they won't put up with going hungry ... not when they have guns. In fact, blood is already being spilled over food ...

Egypt — food riots! In the time of Julius Caesar and Cleopatra, Egypt was the bread basket of the Mediterranean. Boy, how times have changed. Food inflation is so bad in Egypt that people are rioting over sky-high prices. The government-owned Egyptian Gazette newspaper says that seven people have died since the beginning of the year in brawls in bread lines.

And it's not just Egypt. The World Bank says 33 countries from Mexico to Yemen have already experienced unrest because of spiraling food costs, and 37 countries may face more social upheavals if food prices continue to rise.

China says "no" to hungry Filipinos. The Philippine government recently asked China to provide 200,000 metric tons of milling wheat, equivalent to about 10% of annual consumption. Beijing declined, leaving the Philippines scrambling to find more wheat. Internal Sponsorship

Surging Natural Resource Prices

Mean Monumental Profits for

Latin American Companies

You've seen oil zoom past $100 per barrel. You know that metals like copper and iron are going through the roof. And you've seen the price explosion in wheat, soybeans, and corn.

Even water — the most basic commodity known to man — is rapidly gaining value as developing nations struggle to provide their populations with potable supplies.

And in my opinion, no region is better positioned to capitalize on soaring commodity prices than Latin America ...

Trouble in Uncle Sam's breadbasket. Cold weather is chilling the fields in the Midwest, and too much rain is sending rivers near their flood levels. Farmers who try to till or plant in soils that are too wet will risk compacting their crops and other problems that result in lower yields. On my blog last week, I published a note from a farmer who complained that he STILL can't get a crop in the ground:

"In 2006, we finished planting my crops on April 23. In 2007, we were done on April 18. I don't want to be the first guy planting, but I don't like being third, either. Early (timely) planting won't happen this year if the weather forecast for the coming weekend proves accurate. Soils are completely saturated to the point of that erosion has already occurred and will get worse with additional heavy rains, and are COLD. I can't tell you how cold because I've not even checked temps yet. If planting is not done by May 1, there will be some nervous farmers in LaSalle County and I'll be one of them."

Now sure, that's a local story, but it's not the only one. In fact, just this week, the USDA reported that corn and rice plantings are being delayed by excessive rain. A hungry world is depending on a good U.S. crop — if we don't get one, those 37 countries the World Bank is talking about could erupt in food riots.

How We Got Here ...

Global food prices surged 57% last month from a year earlier, according to the FAO. There are a number of forces driving that price explosion ...

Weather: Part of it is weather. Too much rain in the U.S. in 2007, flooding in Indonesia and Bangladesh and drought in Canada and Australia curbed world stockpiles. As a result, the poorest countries may spend 56% more on grains this year than a year ago. Global warming will affect crop yields, and mostly not in a good way.

Food or fuel? Ethanol production is on course to account for some 30% of the U.S. corn crop by 2010. The International Monetary Fund estimates that corn ethanol production in the U.S. fueled at least half the rise in world corn demand in each of the past three years. As corn prices go up, animal feed goes up, and prices of other crops rise as farmers switch their fields over to government-supported corn.

As the economic boom in China raises the standard of living, 1.3 billion people have drastically increased their consumption of meat.

Rising Demand: World Bank President Robert Zoellick recently told a conference: "As the Indian commerce minister said to me, going from one meal a day to two meals a day for 300 million people increases demand a lot."

And he's only talking about the poorest of the poor. There are 1.1 billion people in India, and they're all improving their diets and eating more Western foods. Meanwhile, 1.3 billion people in China are eating a lot better and eating a lot more meat — and it takes 7 pounds of grain to make one pound of meat! It's no wonder why food prices in China jumped 28% in February.

Political pressures: China isn't the only large, populous country that is curbing exports to ease prices — and internal unrest — at home.

Vietnam, one of the world's three biggest rice exporters, will reduce shipments by a million tons this year to 3.5 million tons to ensure supplies domestically and curb its highest inflation in more than a decade (20% year over year — ouch!). The government also said it's considering a tax on rice exports. Egypt, Cambodia and Guyana have all also put export bans on rice in place.

Kazakhstan just suspended its wheat exports to tame domestic inflation. Kazakhstan is the breadbasket of Central Asia, and the only state in the region that exports grain, about 50% of the 21 million tons it says it harvested last year.

Ukraine stopped wheat exports this month and reduced barley exports.

Argentina — the world's fourth largest wheat exporter — has effectively pushed back the date that new shipments can leave the country.

India has already put restrictions on its rice imports. And its wheat output, second only to that of China, may drop 1 million tons to 74.81 million tons in the March-April harvest because of a drop in acreage.

Coming Next — Hoarding!

What's more, India may import up to two million tons to build stockpiles — up from imports of 1.8 million tons in 2007 — with an eye on creating a strategic reserve of five million tons of wheat and rice to meet emergencies. Pakistan is also talking about doubling its wheat imports this year.

If other countries start building strategic reserves, it could send prices skyrocketing. And that raises the specter of countries fighting each other over food reserves.

Speaking of reserves, since China reportedly has as much as 200 million tons of grain reserves, you have to wonder why they turned down the Philippines' request for wheat exports ... unless, maybe, they don't have as much as they say they have.

Why would they lie? How about a powder keg with 1.3 billion hungry people sitting on it!

Or maybe the Chinese can see the way that forces in the agriculture market are falling into place and they believe that no stockpile can be big enough!

[SamWelly]

Who needs carbs anyway :pfft:

[queen]

Who needs carbs anyway :pfft:

the chickens and cows

[teamfatboy]

Who needs carbs anyway :pfft:

the chickens and cows

I'm so glad you didn't include tuna....right now, I love my tuna (not!)... :roll:

Cut out the middleman - just eat the grass!

But seriously, thanks for the post, Queen, it's thought-provoking :nod:

[queen]

it is indeed and everytime I shop I am seeing the repercussions of what is going on in th world. NZ is not making any changes to exports or quotas or our own produce and our prices are skyrocketing I know that some people are really feeling the bite of this and this article shows that more is to be expected...

yet we seem to be spending our money and tax dollars and resources on... what? no one seems to know but nothing that helps with food and fuel sources.

[SamWelly]

There has been improvements in prices of non essentials over the last 10 years that to some extent offset the price of rising food prices in 1st world countrys.

Take your basic calculator for example. Hell I don't remember being able to buy a TV for $50 5 years ago?

While fuel prices are increasing, alternative means of transportation are also becoming more readily available.

I loved the John Cambel episode where he went on about the increase in cost of Milk, Bread, and Butter. None of these are 'essentials' nor are they healthy food choices. Canola based food spreads are far more common place and subsequently effect the price of butter to some degree - Milk is going to vary with inflation, and its daily requirement (if any) is minimal - a 60c increase per 2L is not going to make a huge dent in anyones pocket one could assume.

Your last comment is rediculous. Better roading means faster and more efficent transportation of food by transit - shorter routes mean less fuel used, as do more efficent trucks that are being put into action. The governement supports all of the above. We (our consulting company) worked on the Fonterra integration project - The government offered large incentives to help stablise the once heavily fluctuating

[Gym rat]

I have notice that as well food is getting more expensive to buy for the likes of milk yogart etc.I have to pay more for when I buy my cans of tuna and salmon.Good thingh there is milk out there which produce by other brands for the likes of Pams etc.When I saw the price for two litter of medow fresh trim milk at $5.20 Iwas thinking my god that is expensive.

[queen]

There has been improvements in prices of non essentials over the last 10 years that to some extent offset the price of rising food prices in 1st world countrys.

Take your basic calculator for example. Hell I don't remember being able to buy a TV for $50 5 years ago?

While fuel prices are increasing, alternative means of transportation are also becoming more readily available.

I loved the John Cambel episode where he went on about the increase in cost of Milk, Bread, and Butter. None of these are 'essentials' nor are they healthy food choices. Canola based food spreads are far more common place and subsequently effect the price of butter to some degree - Milk is going to vary with inflation, and its daily requirement (if any) is minimal - a 60c increase per 2L is not going to make a huge dent in anyones pocket one could assume.

Your last comment is rediculous. Better roading means faster and more efficent transportation of food by transit - shorter routes mean less fuel used, as do more efficent trucks that are being put into action. The governement supports all of the above. We (our consulting company) worked on the Fonterra integration project - The government offered large incentives to help stablise the once heavily fluctuating

You completely missed my point. You made some of your own but they are wholly unrelated to what I was talking about.

[queen]

I have notice that as well food is getting more expensive to buy for the likes of milk yogart etc.I have to pay more for when I buy my cans of tuna and salmon.Good thingh there is milk out there which produce by other brands for the likes of Pams etc.When I saw the price for two litter of medow fresh trim milk at $5.20 Iwas thinking my god that is expensive.

Yea it doesnt effect me in that I don't drink milk or purchase dairy products beyond some cottage cheese. Its more hearing that people are paying $17 for cheese (a friend said thats what her normal brand has gone up to) and I have noticed an increase in produce and meats have to wait on specials and stock up.

I could imagine if I had a family to feed on a minimal wage that things would not be looking pretty right now. I was reading of issues in China where they have seen a massive price rise in staples which had previously caused rioting. They have introduced steep measures to ban exports on staples and subsidizing those things. Im not saying any of that is right for New Zealand but I know that these increases in price as small as they may seem to some must really hit hard on a budget.

[blairandkelly]

Milk, Bread, and Butter. None of these are 'essentials' nor are they healthy food choices.

not healthy food choices ? i would consider having a glass of milk and a chicken salad roll or sandwich a healthy food choice . i find it ironic that you consider milk to not be a healthy food choice , im sure fonterra would be impressed with your view on this condering you consulted for them

[teamfatboy]

There are several issues in here:

the reliance on oil is placing pressure on foodstuffs indirectly, especially in the US, as corn production moves from foodstuffs (see King Korn, the movie, or read 'The Omnivore's Dilemma" by Michael Pollan) to ethanol. The American reliance on corn is huge, and if it's made into ethanol, it's not feeding the people.

Competition for some foodstuffs is pricing healthy nutrition off the market for low-income families, who (being untrained in good diets, and unskilled in basic healthy food preparation) made bad choices and begin a downward health spiral that in turn places strain on the health system itself.

Looking at history, let's not forget that it was Japanese fears arising from a Western embargo on oil and rubber which brought them into the Second World War. While New Zealand could be complacent, secure in the knowledge that we could, in all probability, feed ourselves in the near term without relying on e.g. Chinese garlic, the longer-term environmental consequences of moving land from one class of use (food) to another (oil), or indeed population growth forcing land from reserves into agriculture or horticulture, cannot readily be reckoned - and anyone who thinks we'd be exempt from the knock-on effects is kidding themselves.

OK - rant over....

[SamWelly]

Milk, Bread, and Butter. None of these are 'essentials' nor are they healthy food choices.

not healthy food choices ? i would consider having a glass of milk and a chicken salad roll or sandwich a healthy food choice . i find it ironic that you consider milk to not be a healthy food choice , im sure fonterra would be impressed with your view on this condering you consulted for them

We obviously don't share the same view on dairy products. Do some research regarding cases of Osteoporosis and Calcium deficiencies and you may start to get the picture.

Butter? Healthy?

Bread? Again? It has its place, hell I eat brown bread occasionally - but there are better options. None of the above are raw materials either.

We consulted on the intergration of companys under the Fonterra umbrella. How does that have anything to do with milk not being healthy?

[blairandkelly]

everythin in moderations the key sammieboy :wink: what ya think of my bulking shake

2 servings of Whey Protein

600ml 2% milk

3 tblspoons peanut butter

2 raw eggs

1 cup vanilla icecream

108g's of protein, 1659 calories, 436g's of fats. If you cant tell, this is definantly a bulking shake!

[Gym rat]

I agree with price of food going up in the long tearm it could have effect on familys who are on mimum wages and also single mums with kids as well.

[queen]

I agree with price of food going up in the long tearm it could have effect on familys who are on mimum wages and also single mums with kids as well.

Is having an effect one of my close friends is a teacher. On her pay she can not afford the price increases and said when petriol hits $2 a litre she will not be able to afford to drive to work anymore and probably have to give up her car. She has no children to support...

So I think of the people who do and are still trying to provide for their families and get to work the odd "50 cents" makes a major differece to people on a budget.

Just because you may bnot feel the pinch yourself its good to have a rounded view of repercussions for OUR entire society. Not just oneself.

As for diet... well we may have special diets but children need a wide variety of foods healthy and in moderation as mentioned. They are growing. I would hardly think anyone here would put a baby, toddler or under 14 on a protein based diet? They have different nutritional needs.

This is an issue for a nation not one just for this forum.

It is something that concerns me and its really good to see a discussion forming that has different views and shows an interest.

TeamFatBoy.. thank you for your input you made some excellent comments. As always you have my respect.

[2guns]

2 servings of Whey Protein

600ml 2% milk

3 tblspoons peanut butter

2 raw eggs

1 cup vanilla icecream

108g's of protein, 1659 calories, 436g's of fats. If you cant tell, this is definantly a bulking shake!

sounds good to me

[2guns]

and yes bread and milk is considered healthy

[mr natural]

as long as burger king keeps prices stable i will be ok. :pfft:

[Pseudonym]

In today's NZ Herald:

What's going up? Everything

Shoppers can expect price rises on all the supermarket shelves as the full force of the global food crisis is felt in New Zealand.

An average trolley of food cost 28.5 per cent more this week than a year ago, mainly because of huge price increases in dairy products.

...

Chicken has already risen by up to 25 per cent in some shops.

http://www.nzherald.co.nz/section/1/sto ... d=10506354

[teamfatboy]

as long as burger king keeps prices stable i will be ok. :pfft:

Wouldn't count on that... you'd be surprised how much fast food depends on corn and corn-based ingredients! There's often corn in the bread, corn in the oil, corn syrup in the soda....

And if BK can't buy corn cheaply 'cos it's being turned into biofuel....

[Gym rat]

I read the excate same article in the Otago Daily times about food prices going up.I was plaining on posting that article.

[SamWelly]

Is having an effect one of my close friends is a teacher. On her pay she can not afford the price increases and said when petriol hits $2 a litre she will not be able to afford to drive to work anymore and probably have to give up her car. She has no children to support...

She needs to learn how to budget. My mother was a teacher and brought up myself and my brother comfortably.

I wouldn't be encouraging my children to eat bread or cheese at the amounts that they seem to. There is a direct corolation to the amount of dairy that a country consumes and the cases of osteoperosis and calcium deficincies.

I get really tired of the 'I can't afford it' line people use so often. I work 3 jobs to support my lifestyle. Your right, it may not effect me as much as a minimum wage family - maybe they should have thought about that before procreating :roll:

You may want to consider the positive things that are happening in our comunity - more efficent cars, improved public transport and roading, and longer lasting engines - requiring less money to maintain the vehicle. Rental and house ownership costs on the decline, child care assistance from the government, employment at a 20 year high, and the working for familys scheme.

I know first hand what the average person spend there money on - I assesed 15 mortgage applications a day as a mortgage lender (90% of which didn't meet criteria). If 'most' of these people stopped blowing thier paycheck on booze and cigeretes then the cost of food might not be such a big deal...

[Small]

I wouldn't be encouraging my children to eat bread or cheese at the amounts that they seem to.

not all children eat unhealthy uno. ppl prolly assume u are on aas samwelly to which emphatically reply u are natural; same deal, misconceptions - u are assuming all children eat nothin but junk i.e chippies and lollies (or in your words great amounts of bread or cheese), dont be throwing children into the melting pot of being unhealthy - in most cases they eat what is in the home, be it bread or cheese, aslong as they have food for christs sake.

maybe they should have thought about that before procreating

some children arent planned - and dont retort with abortion; some mothers who have to carry the baby for 9months wont agree with that, heck even some fathers, even if the baby is unplanned, dont want it terminated.

not shure, jus sumthings i pickd up on. ur welcome to ure opinion ofc

however mrnatural i partially disagree, if bk went outof business maybe i culd aktually Do my comp diet :pfft: 8)

[SamWelly]

I wouldn't be encouraging my children to eat bread or cheese at the amounts that they seem to.

not all children eat unhealthy uno. ppl prolly assume u are on aas samwelly to which emphatically reply u are natural; same deal, misconceptions - u are assuming all children eat nothin but junk i.e chippies and lollies (or in your words great amounts of bread or cheese), dont be throwing children into the melting pot of being unhealthy - in most cases they eat what is in the home, be it bread or cheese, aslong as they have food for christs sake.

maybe they should have thought about that before procreating

some children arent planned - and dont retort with abortion; some mothers who have to carry the baby for 9months wont agree with that, heck even some fathers, even if the baby is unplanned, dont want it terminated.

not shure, jus sumthings i pickd up on. ur welcome to ure opinion ofc

however mrnatural i partially disagree, if bk went outof business maybe i culd aktually Do my comp diet :pfft: 8)

Hahaha, Can you please note where I assume what children eat? I don't even mention that they eat unhealthily??? I just note that Milk, Bread, and Butter are not neccesitys for and adult, nor have a major part in a childs diet.

As for unplanned children, sure, I agree that it can happen. But by the 2nd 'unplanned' child you would hope they had sorted their shit out... :roll:

Seriously, I don't think you read my post at all. You just miss quoted two things and went on a giant rant.

[poos_n_wees]

She needs to learn how to budget. My mother was a teacher and brought up myself and my brother comfortably.

I wouldn't be encouraging my children to eat bread or cheese at the amounts that they seem to. There is a direct corolation to the amount of dairy that a country consumes and the cases of osteoperosis and calcium deficincies.

We're not talking about osteoporosis or calcium deficiencies. Do you really think a starving family is thinking about whether they are deficient in calcium or at risk of osteoporosis? Milk, bread and butter are a staple in most households. In fact, butter is a luxury for many low income families. And while I agree that its not the best choice of food, we're talking about the general population here.. not the members of the Welly Les Mills who're trying to lose weight.

I get really tired of the 'I can't afford it' line people use so often. I work 3 jobs to support my lifestyle. Your right, it may not effect me as much as a minimum wage family - maybe they should have thought about that before procreating :roll:

Wow, did you want a medal?

I know first hand what the average person spend there money on - I assesed 15 mortgage applications a day as a mortgage lender (90% of which didn't meet criteria). If 'most' of these people stopped blowing thier paycheck on booze and cigeretes then the cost of food might not be such a big deal...

I work at the Aucks City Mission and have seen first hand the struggles of families and people in the "lower socioeconomic areas" of our country. Not all of them are blowing their paychecks on booze and ciggies.. in FACT, most of them are paying their bills with grocery shopping as the LAST item of their priority list (there was a study done recently that can confirm this). How can you supply fresh food for your kids if you can't even afford the power bill to keep your fridge running?

Many of these people are unskilled, working in blue-collar jobs for a crap wage and uneducated in healthy living/cooking.. BUT are willing to learn and do want to provide the best for their kids. They're often just not sure where to look for help and usually come to us when they're at their lowest point, and even then, are very embarassed to be asking for help.

Your post got my blood boiling.. you really have no idea.