The Steeply Rising Prices of Staple Foods
Aug 28, 2007 by Michael Redbourn
In the past year alone the price of a loaf of bread in U.K. shops rose by 15% and will soon rise again and bread isn't the only staple food whose price has been rising rapidly.
According to the research company ‘TNS Worldpanel’, “in the last twelve months the supermarket price of milk went up by 11%, eggs went up by almost 18%, butter went up by 5% and meat by 6%”, all of which are well above the rate of inflation.
Some foods however didn’t go up in price and the price of cheese actually fell but that is about to change because of the rise in the cost of milk. The cost of powdered milk has more than doubled and it won't be long before that feeds through to the consumer in higher prices and not just for cheese but for other foods too, like pizza.
So What’s Driving Up The Prices?
1) Oil. The rising cost of oil affects everyone, including farmers, food companies, shops and supermarkets.
2) China. There is an increasing demand for western foodstuffs from developing countries like China! The more affluent Chinese consumers now eat more meat so China needs to import more cereals to feed its mushrooming population of pigs and poultry.
3) Perhaps more surprisingly, bio-fuels.
Britain's biggest sugar company, British Sugar is currently building an extension to its factory at Wissington in Norfolk that will turn surplus sugar beet into 70 million litres a year of ethanol which will then be blended with conventional petrol to run cars. Several other companies are also planning to build bio-fuel plants in the U.K.
I Thought Bio-Fuels Were Good ?!
They are, but the downside to bio-ethanol which is seen as a greener and more sustainable alternative to traditional petrol is that the land which until recently was growing crops for food is now growing crops for fuel.
The United Nations says a full third of the total U.S. maize crop was used for ethanol last year and The International Monetary Fund says that there's no question that the demand for bio-fuels is driving up food prices.
However you cut it, it looks like folks in England will just have to get used to paying more money for food!