Monday, September 03, 2007

Food prices Could Rise by 50% in Five Years

From here

HOW much do you think a litre of milk costs? A dollar? Two dollars maybe? Actually it's $2.30 and it's going up so fast the guy in the coffee shop below my office on Flinders Lane has put up a big sign explaining the new prices.

The price of milk has risen 20 per cent in the past year, says Bill Barbour, and he should know. He's the investment manager at the DWS Global Agribusiness Fund, a $1.6 billion fund from Deutsche Bank that was formed last year to capitalise on what he calls "Ag-flation" — the sudden and irreversible upward momentum in food prices which is going to change the world as we know it.

Australian milk and dairy prices are bounding ahead and wheat prices are at an all-time high.

In China pork prices are up 90 per cent, in Britain food prices are growing at their fastest in a decade, in Mexico a sudden lift in the cost of flour for tortillas caused a riot a few months ago.

I had barely digested this news about food price inflation when two of the biggest food companies on the stock exchange reported annual results. At Goodman Fielder, CEO Peter Margin talked of a "perfect storm" of higher wheat and oil prices; at Futuris — owners of Elders Rural — CEO Les Wozniczka suggested food prices could rise by 50 per cent in the next five years.


Anonymous said...

The big problem is that usually the farmer is not seeing the same increases in his profit. The middle men and commodity speculators are the ones making the money. While all of us normal decent folks struggle to produce or consume the product.

John said...

Yea I agree that the biggest losers in farming are often the farmers, however the price of food still has to increase dramatically if sustainable farming is to be economically viable.