Cobber – friend, mate.
Phil Clarke reports that hundreds of farmers in Britain are signing up to supply wheat to a new bio ethanol plant.
Presumably they are responding to market signals and getting a better price for their crop than they would if they were selling it for milling or stock feed.
However, given the shortage of wheat internationally it’s difficult to understand how that can be.
The drought in Russia last northern summer, China, the United States and drought and floods in Australia will all put pressure on supply which ought to result in better prices.
Something must be out of kilter if farmers get more for selling crops for fuel when there’s a growing shortage of food.
Could it be
a Green plot to reduce world population by starving people to death by eco-extremists who have talked about population control as a planet-saving measure?
Given we export most of the former and import most of the latter that ought to be cause for celebration but not everyone sees it that way:
Manaia Health PHO Chief Executive Chris Farrelly has slammed the high cost of milk saying it is a national outrage that a country that produces 15 billion litres annually cannot supply cheap milk to the domestic market . .
The price of milk in a Whangarei supermarket for a two litre bottle of milk was up to $4.79 and the cheapest was $3.65. Families in Australia are paying A$2. Recently the price of milk in Australia was slashed by 33%, while the price of milk continues to rise. . .
Australia doesn’t export as high a proportion of its milk as we do and the price is low because of strong competition between supermarkets.
“Low income families simply cannot afford to drink milk,” says Mr Farrelly. “It’s no wonder we are seeing increasing childhood obesity and diabetes if families are swapping milk for fizzy.
“The argument that milk sold in New Zealand must match international prices is a nonsense particularly when only 5% of our milk production is for the domestic market. We should note the wisdom of the large middle east oil producing states which ensure cheap petrol for their own people” Mr Farrelly says.
The argument domestic prices must match international ones isn’t nonsense. Farmers go for the best price and if the export price was better than the domestic one then they’d give up town supply.
One way to bring the domestic price down is subsidies which would be very expensive and not necessarily help the people who need it most.
The other is to restrict exports which would sabotage the economic recovery and might not make any difference to domestic prices. When Argentina did that farmers swapped from dairying to soya which was more profitable, supply dropped and the country had to start importing milk which was more expensive.
The problem isn’t that the price is too high, it’s either that incomes are too low or people don’t budget well.
Increasing incomes requires sustainable growth in the tradable sector. That won’t be achieved by subsidies but is helped by better prices for milk and there was more good news on that front in this morning’s globalDairyTrade auction.
The trade weighted index went up 3.9%.
The recipe for anhydrous milk fat dropped 2.4%; skim milk powder went up .7%; and the whole milk powder price increased 7.9%.
Growing in the all the wrong places isn’t difficult – that’s what happened from 2003 to 2009:
Finance Minister Bill English explains:
. . . non-tradable jobs grew strongly from 2003 to 2009 – up about 300,000 – as New Zealanders borrowed against the rising value of their homes to go on an unprecedented retail spendup. Many of these jobs turned out to be as unsustainable as the borrowing that fuelled them.
By contrast, during this period the tradables sector – the part of our economy that earns our living with the rest of the world – actually went into recession and shed about 55,000 jobs as it was smothered by poor government policy settings, rising interest rates and a rising dollar.
Economic recovery depends on more jobs from export industries.
I’m pleased to see that in the last five quarters, jobs in the tradables sector have increased by 25,000 – or about 6 per cent. That growth needs to pick up pace, but it is an encouraging start.