Up, up and out of reach
Food prices are high and getting higher. Some of this can be blamed on the alternate use of crops for biofuel, and some due to the shifting of production towards more biofuel friendly crops. Whether this is a good thing or not would need more discussion than I can give it here. Suffice it to say that there are credible studies suggesting that biofuels may require more energy to produce than that which they eventually provide. Knee-jerk green policies and subsidies in some countries by-pass the free markets ability to make sense of complex information. We’re probably shooting ourselves in the feet.
But the increase in food prices go beyond this.
Blame it on the fuel
Perhaps another element is that as fuel prices increase, so the cost of food production (everything from land preparation, crop monitoring, harvesting, transport, processing and packaging) has increased. With oil spiking 9% to $139 on Friday, and up massively over the last few years (I don’t have exact figures on hand) this clearly has contributed.
But what about consumption?
Consumption patterns in BRIC
As China and India (and Brazil and Russia to some extent, collectively the BRIC countries) increase their standards of living and consumption of consumer goods and durables, what is happening to their daily kilojoule consumption? The widely publicised obesity problem in the US (and I understand starting in the UK already) is partly a function of , but also a function of affordability and prosperity.
So are developing nations consuming more food than they were previously? Sounds undeniable. How was international food production kept pace? Ok, here is where I admit I don’t know.
The chart above shows the inequality in the spread of obesity – First and Second largest world economies at top and bottom. Perhaps culture does have more to with this that pure per capita income does.
Obesity in developing countries
The scary thing about these articles? They’re from before the current millenium. As at 1999, developing countries were consuming on average about a third less than their US counterparts. Compound that with increasing populations, and it’s a food timebomb.
Heading off to a Solvency II conference in Prague this evening. QIS 4 is hot news at the moment, and the conference is going to cover many of the details and requirements of the exercise.
Large European multinationals have spent enormous effort on the 4 QIS exercises. The data requirements alone are huge. Somehow CEIOPS has managed to keep the project more or less on track – the same can’t be said for the IFRS4 Phase 2 project. Given the intended consistency between IFRS and Sol2, I wonder whether this means IFRS will by default be more heavily influenced by Sol2 (and the recently published MCEV principles fomr the CFO Forum) than previously thought.
Will have some specifics from the course to blog about over the next week.
Tiisetso Motsoeneng from
www.fin24.comJohannesburg – South African new vehicle sales extended the decline in May, falling by a massive 23.4%, or 12 095 units, to 39 533 units compared with the same month last year, an industry body’s new data showed on Tuesday.
JOHANNESBURG (Reuters) – South Africa’s key CPIX consumer inflation is unlikely to return to within the 3 to 6 percent target band before 2010, a senior central bank official said on Monday.
The targeted gauge jumped unexpectedly to a near 5-1/2-year high of 10.4 percent year-on-year in April, prompting hawkish comments from central bank Governor Tito Mboweni that boosted chances of a bigger-than-expected interest rate increase next week.
JOHANNESBURG (Reuters) – South Africa’s targeted CPIX inflation rate quickened unexpectedly to a near 5-1/2-year high of 10.4 percent year-on-year in April from 10.1 percent in March, official data showed on Wednesday.
The all-items consumer price index (CPI) increased by an annual rate of 11.1 percent, compared to 10.6 percent in March, Statistics South Africa said.
The Standard Bank median house price index recorded a growth rate of -5,2% year-on-year in March, according to the bank’s Residential Property Gauge released today.
Commenting on the data, Standard says, affordability and valuation measures for South African residential property yield a broadly similar and consistent picture that provides some explanation with respect to the current state of the South African residential property market.
“Our findings indicate that residential property was relatively cheap in the late 1990s and in the first few years of the current decade. The combination of lower interest rates and the marked improvement in the country’s growth dynamic in an environment of relatively cheap/affordable residential property was the catalyst for a boom in residential property prices.�
However, from 2004 house price appreciation outperformed growth in income and rentals, suggesting a dislocation of house price growth relative to its fundamental drivers. “This signalled that house price growth was unsustainable at the 2004 to 2006 growth rates.�
