Ukraine war, China lockdowns and Brexit help push up inflation, with products that rely on wheat worst hit
Food price rises in the UK could hit 15% this summer – the highest level in more than 20 years – with inflation lasting into the middle of next year, according to a report.
Meat, cereals, dairy, fruit and vegetables are likely to be the worst affected as the war in Ukraine combines with production lockdowns in China and export bans on key food stuffs such as palm oil from Indonesia and wheat from India, the grocery trade body IGD warns.
1 thought on “UK food price rises could hit 15% over summer, report says | The Guardian”
Have to say, this report is fairly typical and like most, utterly misses the reality of food prices and their inflation.
Anyone actually watching international agricultural commodities could see quite easily that Covid has had almost no effect on food prices, simply because, it’s one of the few industries that carried on, in exactly the same way as normal, neither has China made much difference, except for perhaps having a more muted presence in the buying bit of the markets ( caused by covid lockdown).
The fact is, that growing global population and wealth, has meant that over the last 5-10 years the gap between the two curves on the graph, of growing food production, and growing global population, has been getting ever closer, year on year, and now, for the first time ever, global population, is expanding faster than our ability to increase food production.
Ukraine has been the tipping point, but make no mistake, all it’s done, is bring forward where we’d have been in the next 3-5 years anyway.
The only reason spare food available for trading on international markets hasn’t reached this point in say 2010, has been our increasing rate of felling rainforest, to create extra land on which to produce food.
Most agricultural commodities have, since we joined the EU, followed the same price profile more or less, and using wheat as a bell weather, it’s price at the farm gate, has barely moved out of the £120-£160/tonne between 1975, and 2010.
Since then, good old supply and demand, have seen the global prices for wheat ( and everything else too), creeping slowly up, year on year, till two years ago, when it broke the £220/tonne rate for the first time, it had hit £300/tonne before Ukraine got going, and it broke yet another record high, of more than £400/ tonne a couple of weeks ago, after the USDA, released yield warnings following yet another record drought over North America and Canada.
The simple fact is, most of the food, and it’s attended prices you all see, is based on last years old crop prices, and the fact remains, confirmed by a couple of grain trader friends of mine, that if this years US harvest is as poor as forcast, new season costs for wheat, could see wheat quite easily hit £5/£6 or even £700/ tonne.
Sadly, and especially governments and money markets, have been so filled with hubris, over our never ending, ever cheaper supplies of food, that they still refuse to accept the era of cheap abundant food, actually went around 6 or 7 years ago, it’s just they missed it because they weren’t even looking.
Yes it’s true that there may be temporary falls re prices, in odd years, but the uncomfortable reality is, this is the new normal, and where as until Brexit, and for the last 15 years or so food had fallen to around only 12% of the average household’s weekly spend, it’s doubled already to 18% in the last year, and it will in all likelihood be back to where it was before our EU membership, at 45-50%/ of available weekly income.
As for Brexit, what of it, well exactly as predicted, it’s made food more expensive, by around 20% more than it could have been, due to the fact it’s wrecked our EU export import supply chain for the huge volumes of fresh, short shelf life foods, like dairy, some fresh meats, but mostly all kinds of veg especially salads, and soft fruits.
Wheat prices going through the roof, mean that there just isn’t any cheap food to buy from the other side of the world anymore, and that as beef and dairy production, in North America and Australia, is based on feed lots feeding huge piles of wheat and maize silage, their economic model is blown out of the water, compared to the grass based feed systems for the same in the UK, Northern Europe and New Zealand.
We have to face the facts that the era of cheap food has gone, and while Brexit has NOT caused it, it’s certainly making it much much worse, very fast