Wednesday, August 11, 2010

Russian heatwave, Pakistani floods and the price of bread

Here in the UK we may feel that we are unaffected by the Russian heatwave and the Pakistani floods. The reality however is that we will be very much affected. We have got used to relatively cheap food supplies from all over the planet. Western countries have been at the top of the global market food chain and we have got rather used to it. But times are changing and the events in Russia and Pakistan illustrate that and will add to the difficulties we are facing.

Russia is a major exporter of grain. In the post communist world they have become the bread basket of the West (though it is fair to say that the former USSR did sometimes export grain to the West). The extreme weather conditions there will significantly reduce the crop and lead to shortages.

Then drop into the equation both the rise in the world's population and the increase in prosperity of the populous nations of India and China. The outcome is the end of cheap grain supplies for the West. Indeed, the increase in prosperity of India and China even without a population increase would be likely on its own to force up the price of grain on the international markets. As prosperity has risen, people's demands for more expensive, Western diets needing more resources to produce have risen as well. Meat consumption in particular has gone up sharply. Yet meat production is a very inefficient way to produce nutrition and takes up vast amounts of land to grow the grain used as animal feed and to contain the livestock. India until recently was a grain exporting country. Now she is a net importer.

The disaster in Pakistan has wiped out crops putting even more pressure on the world's food supply. The infrastructure that supports agriculture there may be seriously damaged for years to come.

Interestingly, bakery firms in the UK are already warning of price rises to come. These will be in addition to the price rises that came along in 2008, caused by increased demand and crop failures. The point is, global environmental and trading problems have a direct impact on household budgets. Britain needs to look seriously at how food is produced and used. As a nation we need to reduce our consumption of meat. I am not suggesting we all become vegetarians but our diet needs to be mainly vegetarian. And we need to look seriously at increasing our domestic supplies of food.

So there we have it, food for thought.
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