Grain Price Rises Pushes Food Prices Up

July 12, 2008

Good news for producers is bad news for consumers because rising international prices for grain will push domestic food prices up again.

Bread prices are predicted to rise 10c a loaf and pork and bacon prices $2 to $3 a kg.

Food producers face new grain contracts – $100 a tonne, or 30%, higher than last year.

Farmers say contracts for next season’s harvest, which are about to be signed, reflected those higher prices.

Pig and poultry producers say price rises are inevitable to cover higher feed costs.

Foodstuffs (South Island) chief executive Steve Anderson agrees, and warns costs will continue to increase across the board.

He could not quantify the size of any increase, saying that was up to suppliers, but he doubted there would be any price correction in the immediate future.

“We’re not planning on seeing a reduction in commodity prices in general.”

The price for meat and wool is also driven by the price of grain and that in turn is driven by the price of energy. The combined shortage of food and high fuel prices will push the price of all food up.

Grain prices were so volatile, milling wheat growers were not signing contracts at $500 a tonne, claiming the price was still $100 a tonne below the international price and higher-yielding feed wheat.

“It is a rising market. On a falling market, everyone would be signing,” Federated Farmers grains council chairman Ian Morten said.

Demand from dairy farmers had also driven up cereal prices. Growers have been encouraged to plant higher-yielding feed varieties instead of milling wheat, which gave them leverage against the mills.

Grain growers had this year resumed exporting to take advantage of higher international spot prices, something they had not done for many years, which reduced the availability of domestically-grown cereals.

On top of this is the competition for land from the misguided policy which changes land use from producing food for people to the production of fuel for vehicles.

Farmers and food producers also blamed Solid Energy for higher prices, as it has contracted 5000ha of predominantly cropping land to grow oilseed rape for biodiesel production this year.

Solid Energy plans to increase that production to between 20,000ha and 25,000ha within three years.

Mainland Poultry chief executive Michael Guthrie said international issues had driven grain prices up 80% for his egg business in the past 18 months.

Drought in Australia had decimated world grain production; there had been floods and biofuel production in the United States; growing demand for grain from China and India; low world grain stocks; and dairying had taken over cropping land in New Zealand.

Mr Guthrie said egg prices had been stable for the past two years. He expected prices to rise, but could not say by how much.

Pork Industry Board chairman Chris Trengrove said New Zealand was six months behind the rest of the world on feeling the impact of higher grain prices.

Pork and bacon prices would need to increase about $1 a kg to the farmer to cover rising costs, which translated to between $2 to $3 a kg to the consumer.

Production and transport costs are also rising for fruit and vegetables and that too will impact on retail prices.

Repeated competition from rabbits persuaded me to abandon my vegetable garden but now it has been securely fenced this seems like a good time to get it ready for spring planting.


Hager’s Hollow Horror

July 5, 2008

John Roghan  says Nicky Hager is carving out a new career in disingenuous political naivete.

Not content with a book based on Don Brash’s emails, since brought to the stage and soon to be a movie too, Hager is running a sequel on the discovery that some of the same “hollow men” are consultants to John Key.

The fact that someone in the National Party must be passing this material to Hager is far more interesting than the use he is making of it, and I have no objection to his using it.

I agree that where the material comes from is the more interesting, and for National, more serious point.

…email, I think, is fair game. A fair reporter, though, could reveal what he learns without feigned horror at the fact that people running for public office hire consultants who try to conceal some of their intentions during an election campaign.

Parties of all stripes are coy on some subjects before an election for good reasons.

The public interest can be greater than the sum of personal interests, sometimes even in conflict with direct personal gains. It is easy to sell benefits to a section of the electorate, harder to explain how the benefits hurt a country in the long run.

Some are minority interests that should be advanced in the national interest. Hager should ponder how much progress Maori would have made in recent decades if every step in their recognition had been an election issue.

Quite.

Public debate usually favours the status quo. Not much could ever be done if every decision was put to the electorate for a prior mandate.

Take the present Government’s biggest economic moves, KiwiSaver and, this week, KiwiRail, which I don’t remember being canvassed, with all their costly implications, at elections beforehand.

Had Labour given an inkling at the last election of the premium they have had to pay to re-nationalise the railway, and the fortune it is going to cost to cover its likely losses, National’s last campaign would have feasted on the information.

If only.

But now that the deed is done, the politics have changed. The purchase is the status quo and National will not dare put re-privatisation before the electorate this year, though that may be what it ultimately does with the trains if not the tracks.

Yep – once something is underway it is difficult to change it, even if it’s because sometimes bad policy is good politics.

Likewise KiwiSaver, a year old this week. At the last election the savings scheme was an essentially voluntary proposal. The following year it was to become compulsory for employers and acquire some costly enticements of dubious economic value.

Not long ago my employers wound up my company super fund. I couldn’t blame them; from April they had to contribute to KiwiSaver if staff favoured it. And who of us were going to turn down Cullen’s $1000 handout and tax credits?

The scheme celebrated its first birthday on Tuesday with 718,000 members – more than double the number predicted in the first year. The only people complaining about it are those annoying economists who see the difference between individual gains and the national welfare.

They fear the scheme will not add to total personal savings, merely displace previous savings schemes.

In the Herald last weekend Maria Slade reported an estimate that as little as 9 per cent of the money in KiwiSaver accounts so far is new saving, a percentage the researcher reckoned would not cover the administration and compliance costs of the scheme.

Is anyone surprised by this?

Westpac economist Dominick Stephens said KiwiSaver had cost the taxpayers $497 million in its first 11 months, an amount that could have added to national savings if it had been left in the Budget’s fund for future public pensions.

Even that fund is questioned by some savings professionals who point out that a superannuation scheme is only as good as the future economy that will have to pay out. From that point of view, the best retirement insurance is the investment made in the economy today.

And not just retirement – health, education and every other service will be more secure in the future if we strengthen the economy now.

Anyone who believes that the best investments are made by those who stand to lose if they get it wrong would argue the economy would be stronger in the long run if the KiwiSaver incentives were turned into personal tax cuts.

And yes again.

Nevertheless, National will have to keep the scheme now that it is replacing private savings on such a scale. The best the party can do is continue to avoid saying whether it will keep the incentives.

It will not be easy, and should not be easy; it is the job of political opponents and the press to pin all policies down. But adroit tacticians can keep the options open and enable a government to come to power with room to move in the national interest. Voters, I think, understand this. They don’t need horrified disclosures that it happens. It is the horror that sounds hollow.

Exactly. National has learnt from the damage done by stupid promises made by Jim Bolger before the 1990 election; and Helen Clark has too which is why she keeps trying to under promise and over deliver.

Parties should be upfront about their philosophy, principles, general  policy, and – sometime before an election – some detailed policy. But they can’t be specific about everything because, once a party is in Government it must have room to adapt to events and circumstances.


Message Manners

July 4, 2008

There’s a message on the answerphone, it’s long and involved. The phone number is left at the end but I miss it so I have to listen to the whole message again; and because I’m not sure if I’ve caught it correctly I have to listen a third time to check but because I’ve got the gist of the message my mind wanders and I miss the number…

I’m trying to train myself to leave my number at the start and end of messages so other people don’t have to go through that before they can ring me back.


Trainwreck Back To The Future

July 4, 2008

The best advice I had from a racing driver was to look where you’re going because you’ll go where you’re looking.  Jim Hopkins  proves the lesson doesn’t just apply to the road:

We like looking back. We love the rear-vision mirror. It’s our true compass.

That’s why we’ve just bought all those trains, lock, stock and funnel – for $640 million or a billion, depending on who you believe.

And, apparently, all us good old, rear-vision Kiwis are positively chuffed we’ve got the trains back. We think it’s great that Michael Cullen’s the new Thin Controller.

No matter that we didn’t need to buy 100 per cent of Toll when 51 per cent would’ve been perfectly fine.

No matter that we’re now obliged to spend $300,000,000 on new kit. No matter that any increase in rail traffic will, paradoxically, increase the demand for better roads – to truck goods from the hinterland to the track.

Because we’re back where we were. And yesterday is such a cosy place.

Meanwhile, Kupe and Cook are in India, talking to the Tata motor company, which is busily developing a French-invented compressed-air engine that will replace the gas-guzzlers we’ve got in our cars and trucks.

And that’s just one of the innovations under way in places where people look forward.

Mark my words. Within a decade, the world’s roads will be teeming with vehicles running on air, hydrogen, fuel cells, electricity and, who knows, maybe even that weird stuff you find in your belly button when you’ve forgotten to wash it for a while.

The combination of a ubiquitous infrastructure and a propulsive revolution will make trains even quainter than they are now. And no amount of sticking up RUCs to screw the transport scrum on the very day you become Brutish Rail will change that.

If you haven’t read this yet, it’s probably because your paper’s late and that’s probably because the roads are jammed with angry truckers who’ve probably decided they’ve had enough because they probably think our great leap backwards has gone off the rails.

And we’ll all be casualties of the train wreck that results from this reckless ride back to the future on 19th century technology, fuelled by 20th century ideology and funded by 21st century tax payers.



Riverstone Kitchen

June 23, 2008

Lauraine Jacobs waxed lyrical about the delights of Riverstone Kitchen  duirng her guest chef slot on Nine to Noon this morning.

The praise is well deserved. Chef Bevan Smith serves delicious food in simple but elegant surroundings. Most of the fruit and vegetables served are grown on the property and he features as much local produce as possible.

If you’ve time, a wander round the adjourning gift shop run by Bevan’s mother, Dot, is a delightful way to finish your visit.


And the Sun Doesn’t Rise in the East

June 23, 2008

Helen Clark is refusing to accept the large poll gap between National and Labour.

Prime Minister Helen Clark says three separate polls at the weekend that show Labour trailing National by over 20 percent are “very extreme” and overstate the Opposition’s lead.

 

A TV One Colmar Brunton poll last night had National on 55 percent with Labour lagging on 29 per cent support.

That followed Saturday’s Fairfax Media poll by AC Nielsen showing National winning 54 percent of the party vote against Labour’s 30 per cent.

The latest Roy Morgan poll also showed a large gap with National’s support up two to 52.5 per cent while Labour dropped 0.5 to 31.5 per cent.

But Miss Clark today refused to accept the size of the gap recorded in the polls, which she said were “very extreme”.

It is usual for poll gaps between  the two major parties to narrow and for the wee parties to get more support nearer to election day so these poll results may not mirror voter support when it counts. But the trend is clear, National and John Key are well ahead of Labour and Clark.

In light of that her real fear should be that softer supporters leave Labour and vote for the wee parties as happened with National in 2002.

Other blogs’ comments on the polls:

The Hive    No Minister    Truth Seeker      Keeping Stock     Inquiring Mind


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