Panic over food prices escalates
23 August 2010
There is increasing concern over the prospect of rocketing food prices in the not-too-distant future, influenced by several external factors. Now a new one has emerged - China's taste for meat, which in 2007 totalled 43m tonnes of pork.
In a report in The Sunday Times, several reasons were advanced for China's burgeoning interest in meat: urbanisation, population growth and general prosperity arising from the country's economic boom. The fact that China is the world's most populous country is another reason for the rising concern, as is the point beef consumption is expected to rise by a third within five years.
The ST notes that keeping up that pace will press current resources 'to the limit' as it takes about 9kg of grain to produce 1kg of beef. James Walton, chief economist at IGD, the food and grocery analyst warns: ''We should brace ourselves for long-term price volatility.''
This has brought potash into the picture: it's a potassium-rich stone that helps put food on the orld's tables. What is its significance? It is one of the main fertilisers used by farmers to increase crop yields and demand is rocketing as the global population grows and eating habits change.
Indeed, over the past few months, the prospect of rocketing food prices has slowly reached fever pitch. In June this year, a United Nations report warned food prices will rise by up to 40% over the next decade.
With the Consumer Price Index (CPI) standing at 3.2%, the latest analysis by mySupermarket.co.uk, the grocery shopping and comparison site, has revealed consumers have been hit by price rises of as much as 59% over the past three years
Shoppers have no doubt been hard hit by rising prices, says mySupermarket.co.uk, the grocery shopping and comparison site, but pricing data from the UK’s leading supermarkets between 2007 and 2010 reveals the true extent of how much extra they have had to fork each week.
Staples such as bread has risen in average price by 18%. While tea has increased by 30%, and eggs have risen in average price by 18%. Rice have risen in price by a whopping 59% (see table below).
Cost of meat soars: The data further revealed it has become increasingly costly for UK adults to buy meat, with a clear difference in the rising cost of red meat versus white meat. Overall the cost of fresh meat has risen by 10% on average over the last three years. However, the cost of bacon has risen by 9%, while chicken and turkey has become cheaper, decreasing by 6%. Fish lovers however have faired some what better, with fresh fish becoming cheaper, declining by 8%.
Jonny Steel, spokesperson for mySupermarket.co.uk said: “While prices have stabilised or even gone down over the past year, the cost of every day essentials has still dramatically increased over the last three years. Consumers may feel that they are starting to bounce back from the affects of the most recent recession, but effectively they are forking out up to 59% more for some shopping items than they were three years ago.”
Cost of a child: The analysis of grocery prices also revealed over the past three years it has become increasingly expensive to buy food and essentials for babies. The cost of baby care (wipes, creams, baby bath etc) has risen 38%, while baby food and snacks have risen in cost by 21%. At the same time the cost of baby milk and drinks has risen 29%.
Raining cats and dogs: Over the past three years, British cat owners have also been hit harder in the pocket than unsuspecting dog owners. While cat food has increased 13%, dog food has increased at a higher rate of 20%.
Jonny Steel said: “Shoppers need to make sure they genuinely are shopping around to get the most for their money. The Consumer Price Index may now stand at 3.2% and be down 0.2% on the previous month, but this doesn’t paint the whole picture. This is especially true when you consider the likes of basics such as bread and eggs increasing in cost by 18% over the last three years. Shoppers need to make sure they don’t become complacent now the recession is over – as the battle to save money is still very much on.”
But the biggest increase has been in the price of rice and pulses such as lentils or beans, which have risen by 58%.
Growing demand from emerging markets and for biofuel production will send prices soaring, according to the OECD and the UN Food and Agriculture Organisation. The forecasts are for wheat and coarse grain prices over the next 10 years to be between 15-40% higher in real terms, once adjusted for inflation, than their average levels during the 1997-2006 period, the decade before the price spike of 2007-08.
Real prices for vegetable oils are expected to be more than 40% higher and dairy prices are projected to be between 16-45% higher. But rises in livestock prices are expected to be less marked, although world demand for meat is climbing faster than for other farm commodities on the back of rising wealth for some sections of the population in emerging economies.
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