Owen Roberts, Urban Cowboy
Global food prices are on the rise after having spiked over the past six months.
An announcement last week by the United Nations Food and Agriculture Organization put farming on the front pages, saying worldwide food prices hit record numbers in December.
Look at that again. Food prices hit record numbers.
Yet, we hardly notice. Despite the fact that food is essential, it’s so cheap relative to other commodities and pursuits in the developed world, that even when it hits a peak it’s mostly a hiccup in our lives.
Think about what happens when other record numbers appear.
Record high oil prices send car shoppers scurrying for Smart Cars, Honda Fits, Nissan Micras and Kia Rios.
Skyrocketing interest rates (remember them?) drive home seekers to rental units.
Plunging and stubbornly low temperatures prompt housebound Canadians to flock to the Caribbean.
But food’s different, and I wonder if most of us had a clue that in December food prices hit the ceiling. Likely not. The pinnacle occurred during the height of consumer spending for Christmas, when almost anything goes. So what if food’s a little more expensive? Everything is expensive at Christmas. Many consumers wouldn’t notice, let alone raise an eyebrow over it.
Before long, though, someone other than economists will need to answer for this spike. I suspect it will be farmers, because inevitably that’s where fingers will point.
Here’s why. Many of the wholesale items found in the international food basket (the one scrutinized for food-price analysis) are straight from the farm — wheat, rice, corn and soybeans. And since June, some of them gained value by double-digit percentages. Wheat, in fact, was up almost 70 per cent. Corn rose more than 50 per cent.
Again, did anyone notice?
At some point, people will. Inevitably, these gains will make their way down to consumers. Processors and retailers won’t absorb them for long.
Then, farmers, it will be over to you.
Ironically, it’s easier to explain the price spike globally than domestically, and graphically show the reasons it exists. For example, weather calamities in major agricultural countries such as Russia and Ukraine (drought) and Australia (flooding), as well as western Canada (too much precipitation), led to pressure on supplies, which meant higher prices. Video captures these situations easily.
But how do you graphically show chronically low prices? It’s reasonable for consumers to wonder how farmers could have existed on prices that were half as high as they are now. It’s understandable that record prices, then, could conjure up some suspicion of gouging.
Farmers need to head this off at the pass. Price spikes give them a golden opportunity to recount the misery-laden past, to recount how commodity prices have been in the basement for decades. That explains why grain farmers have mostly been scraping by, having to resort to huge federal aid some years, at he same time expanding their operations to realize economies of scale to survive. The price spike is actually just getting them to where they need to be, to make a decent living.
That, however, is poorly understood, and when prices rise farmers are vilified. It happened in 2008, and steps must be taken to make sure it doesn’t happen again. No one else in the so-called value chain will take the hit, and it’s easy to blame farmers.
Local food’s popularity is helping warm up consumers to the concept of fairer prices for farmers. But it’s a slow process. Education, rather than price-spike pressure, is how to get there calmly and sustainably.
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