An ever-increasing problem is emerging in many countries, including New Zealand. It’s food insecurity – the lack of access to safe, nutritious, affordable food, which has a serious impact on the physical and mental health of those affected.
A challenging economy and low incomes combined with recent price increases for power, petrol, food and dairy products result in a bleak outlook for many families.
It seems food and commodity prices will continue in their upward curve as global demand outstrips supply, said Dr Camilla Toulmin, director of the International Institute for Environment and Development recently.
Toulmin suggested that the current system of food production “is not fit for purpose” – and that food producers, NGOs and governments must work towards a collaborative solution to increase food production while also reducing its impact on the environment. This solution will likely include the development of new production technologies, as well as methods to reduce waste and improve land-use efficiency.
Nevertheless, she warned: “The price of food is going to go up relative to other things over the next 30 to 40 years. We are going to have to accept that we live in a finite world and there is only so much clever science can achieve.”
As prices for raw materials continue to increase, food manufacturers inevitably have to pass higher costs down the supply chain to consumers.
But in the midst of all this gloom, some local analysts see a positive in rising commodity prices, suggesting that our national economy is poised to benefit from increased rural income that will inevitably filter through from burgeoning international commodity markets.
Soft rural land values and a strong focus on balance sheets has so far curtailed the benefit of the commodities boom to the broader economy, said ANZ economist Steve Edwards.
“This will not continue indefinitely,” he said. “It is only a matter of time before this rejuvenation spills over into other pockets of the economy.”
Edwards said the ANZ Commodity Price Index had lifted 4.7% in March, a new record and the seventh consecutive monthly rise in the index.
This latest month also recorded stronger increases in commodity prices than any of the preceding six months.
“For the first time in 17 years there wasn’t a single decrease in the price of any individual commodity in the basket of 17 commodities that we monitor,” he said – 14 commodity prices increased and three were unchanged.
Whole milkpowder (WMP) prices rose 12% and there was a 7% rise in skim milkpowder (SMP) prices.
Beef prices grew 3%; lamb, casein and butter prices grew 2%; venison and cheese prices rose 1%; and seafood prices increased by 0.5%.
The export prices of kiwifruit and apples were unchanged over the month.
Because the value of the New Zealand dollar weakened in March, the rise in the NZ-dollar commodity price index was magnified, lifting 8.1% from the preceding month, to an all-time high.
“The NZ-dollar priced commodity index is 25% higher than its level a year ago, and nearly double the low point recorded in February 2009, which followed the global financial crisis,” Edwards said.
Times are tough and there will be increasing pressure on price points – but if Edwards is right then there may just be a small silver lining in the clouds.
Tamara Rubanowski, editor@fmcg.co.nz
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