BBC World Food Price Index

02/06/2009

The BBC World Service has been tracking food prices in seven major cities to create a World Food Price Index.

Reporters started making a weekly record of five basic food items in July last year. The basket of goods was normalised to 100 and subsequent changes in prices are measured against that to show rises and falls.

Bread, milk, potatoes, eggs and beef were the products chosen in Brussels, Buenos Aires, Moscow and Washington DC; onions, rice, ground flour, lentils and milk were priced in Delhi; in Jakarta it was eggs, rice, sugar, flour and cooking oil; and in Nairobi it was green maize, milk, maize flour, bread and tomatoes.

Some interesting points in the analysis:

In Brussels prices were fairly flat. The price of milk fell because of a price war between supermarkets but the change wasn’t as great as the fall in price paid to dairy farmers.

In Argentina the price of potatoes, bread and beef were steady but the latter was due to export taxes which resulted in farmers reducing production of beef in favour of better paying produce and the country may have to import meat.

Inflation has hit food prices in India where the price of wheat, rice and other grains has risen by 12%,  fruit and vegetables gained 8.5% and the price of milk rose 6.4% and the price of sugar nearly tripled.

Religious factors influence food prices in Jakarta with a rise in the price of chicken and meat at the end of the Muslim month of fasting. The price of rice has fallen and the government it delaying exports because of this.

Russian food prices increased nearly 10 times more than prices in the European Union.

The biggest rises in the four-month period were seen in prices for fruit – which spiked 17% in Russia while rising only 1.9% in Europe – and sugar, jam, honey, chocolate and confectionery goods, which jumped by 12.7% and only 1.5% in Europe.

Prices for vegetables rose by 11.6%, while fish and seafood prices were up by 9.4%.

 Russia imports nearly a third of its food and the low value of its currency is one of the reasons prices have increased.

Food shortages because of drought and political violence contributed to food shortages in Kenya.

In the USA food prices went up by 5.5% last year but falls in the price of meat and diary products are expected to result in a smaller increase this year.

World Service Average 18/05/09

Better standing on our own feet

27/05/2009

New Zealand farmers’ anger at the USA’s decision to subsidise its dairy exports is well founded.

Federated Farmers dairy section vice-chair John Bluett says:

“It’s a serious concern. The US is going to subsidise 92,000 tonnes of export product. In perspective, New Zealand only produces 105,000 tonnes, so it’s the equivalent of almost subsidising all New Zealand’s production.”

In the Waikato alone it could cost farmers $180 million and it is likely to mean a lower payout next season.

There may be a small benefit to consumers if the subsidies result in lower international commodity prices because that could flow through to lower retail prices here. But any gain will be more than cancelled out by the pain imposed on the wider economy.

However, angry as farmers are, none are calling for a return to subsidies. Hard as it is in the real world at the mercy of markets, it beats the days which Rob describes when farmers’ incomes went up and down at the whim of the government.

There’s another reminder of how bad that is at Phil Clarkes’ Business Blog:

In France, for example, some 81 dairies have been blockaded and dairy farmers have threatened a national “milk strike” if an ongoing “mediation process” fails to deliver a meaningful lift in prices.

In Germany, meanwhile, six women have gone on hunger strike, while around 6000 dairy farmers took to the streets of Berlin to demand a national milk summit.

And this week the protest headed to Brussels, with a claimed 2000 farmers from 10 member states clashing with riot police outside the EU Council building, while farm ministers discussed the market situation.

Taking what the market offers isn’t always easy, but standing on our own feet beats going cap in hands to governments as they do in Europe to find out not only what they’ll earn but also how much they can produce.

Hat Tip: QuoteUnquote


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