As Normal Costs Rise

I commented a few weeks ago on how the price of milk has increased dramatically, and after years of declining prices and increasing costs, there was hope in the air of making some sort of decent profit this year. Of course, there’s nothing like a little money to help suppliers to increase the price of their products … because, well they can.An article appeared in the Irish Examiner Farming section. Nitrogen up 50%, Phosphates up 67% in the year. They are just examples of the rise in costs this year. Anyway, at this rate, we’ll all be on the way to organics pretty soon. Not that there’s anything wrong with being organic, but the choice may begin to disappear, thus devaluing organic products themselves if everyone is at it. On top of that, if fertilizers become too dear, then there will be decreased production per acre, thus leading to further food shortages.

You know, the way that I am seeing this now is that as the world population increases at a greater rate all the time, more and more pressure will be placed on every acre of ground to produce as much as possible, year on year. We will wear out the ground very quickly, and everything will collapse. People will starve around the world. Wars will become the order of the day again. I have a feeling that this food problem will coincide with the oil problem, so we will have less food, and less oil at the same time.

It’s obviously not going to happen immediately. What you will see is more countries being unable to purchase food. More people in our own “wealthy” societies being unable to afford food. Then more cities becoming food hungry. Suffice to say that it’s going to be one big bump if (when) it happens.


Fertiliser prices highest in decade

By Stephen Cadogan

FERTILISER prices have surged to their highest level in at least a decade.

Price rises of 50% in the past year will add significantly to farmers’ costs, and may prevent them from increasing production enough to reduce the record global agricultural commodity prices. High oil prices and strong demand are expected to underpin prices set by fertiliser manufacturers around the world.

Farmers in the EU enjoyed very low prices for nitrogenous fertilisers such as urea in 2006, but prices have shot to record high levels now, having risen about 50% in a year.

Phosphate fertiliser prices have generally increased, at the wholesale level, by about 67% in the past 12 months.

The trend adds to global food price worries. “If prices continue to rise, I would not be surprised if we began to see food riots,” said Jacques Diouf, director-general of the United Nation’s Food and Agriculture Organisation, after more global food price increases emerged recently at wholesale level.

He said many countries will have to take hard decisions because of the impact of food prices. Already, Russia has introduced controls on some basic foods, Morocco recently cut wheat import tariffs, and Egypt has increased food subsidies. Food price inflation in developing countries has risen in the past year to about 11%, compared to non-food inflation of about 7%.

Meanwhile, the world’s lowest wheat stocks since 1979 may fall further due to cuts in Australian wheat yield forecasts. Now, only 12.1m tonnes is expected, down from 15.5m tonnes expected last month, and from 22.5m tonnes projected in June.

The effect of Australia’s record drought will add the sharp rise in wheat prices this year, as consumers in China and India, demand more meat and poultry, in turn forcing up cereal demand for livestock.

Difficulties for grain importing countries are exacerbated by extraordinary rises in ocean freight rates, which are setting new records.

[with regards to the Irish Examiner Farming – I am pasting the article here because they seem to take the content down off their site a week or two after they appear, which doesn’t make for good referencing]


3 comments so far

  1. laurie on

    there aren’t any Wal-Marts in ireland yet, are there? it’s a gigantic chain that undercuts all the other gigantic chains by paying their workers very low wages. shoppers love them, of course, because they’re so cheap.

    anyway, their grocery division has recently started carrying a lot of organic food, and again the prices are cut very low…. some people think this will be good for the environment, over all, because lower prices will increase the demand.

    but others think it will ultimately undercut the market because organic farming is more expensive (for reasons i don’t entirely understand, but i assume has to do with quantity–easier to get more if you spray the hell out of everything) and we’ll have to rely on imported organic.

  2. rough hands on

    No Wal-Marts, just Tesco’s, Lidl, Aldi, Dunnes … etc. But they’re all doing the same thing.
    Lower prices have a few long term effects: increased efficiency at all levels, lower wages, producers going out of business.
    Organic is more expensive because you can only produce less per acre, it requires a lot more work (and people) because you cannot use herbicides or pesticides, are subject to a high rate of crop failure, inputs cost much more (no gas based fertilizers, just seaweed and other natural materials that cost a fortune), for organic meats, you have to buy organic grain which costs twice the conventional grain.
    The list goes on. I’m sure there’s better references as to why it’s so expensive elsewhere on the internet, because I’m going from what I can remember off the top of my head.

  3. […] food: Fertilizer production and transportation is heavily oil dependent. Prices are rising – Nitrogen (made by oil at present) is up 50%, Phospate (also a finite resource) is up 67% – […]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: