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 The stakes get higher as food, fuel and fertiliser costs soar 

The stakes get higher as food, fuel and fertiliser costs soar

23 May, 2008 02:43 PM
The stakes on the 'big picture' issues confronting agriculture were cranked a notch or two higher in the past week, with sobering news on fuel and fertiliser, food inflation and climate change.

Oil prices of $US200 a barrel are now being considered a real possibility in the medium term, after the OPEC oil-producing countries refused to increase production to counter rising prices on the back of still-growing demand for crude.

Speculation on supply drove oil futures to over $US135 a barrel on Wednesday.

The flow-on costs to crude-based fertilisers like synthetic nitrogen, which have leapt 40pc in a fortnight, are challenging the viability of Australia's conventional farming systems, and farmers' ability to recover from a sequence of damaging seasons.

But farmers aren't yet rushing into alternative systems that don't use oil-based nitrogen, according to Dr Andy Monk of Biological Farmers of Australia.

However, he reports that over the past 12 months there has been "an ongoing perceptible increase" in farmers interested in exploring organic and biological systems.

"Some quite large farmers are deciding to organically certify at least one of their farms, or just move in that direction," Dr Monk said.

He also observed that some broadacre organic and biological farmers now find themselves in the unusual position of having per-unit production costs falling below that of some conventional producers.

High farm production and transport costs are just one of several cross-currents that are causing rapid inflation of food prices around the world.

The United States-based International Food Policy Research Institute (IFPRI) said this week that real food prices are still below their peak in the mid-1970s, but are rapidly escalating.

The United Nations Food and Agriculture Organisation's food price index rose by 40pc in 2007 compared with 9pc in 2006, and has continued the trend on the first months of 2008.

An IFPRI policy paper noted that food and energy prices are intertwined, and took direct aim at subsidised biofuels.

"Developed countries should eliminate domestic biofuel subsidies and open their markets to biofuel exporters like Brazil," the IFPRI paper said.

"Biofuel subsidies in the United States and ethanol and biodiesel subsidies in Europe have proven to be misguided policies that have distorted world food markets. Subsidies on biofuel crops also act as an implicit tax on staple foods, on which the poor depend the most."

At the same time, a new study reports that climate change, potentially the biggest factor of all in food production costs, is already changing how the world works.

The study, published in the scientific journal Nature, examined changes in numbers or behaviour of 28,800 plant and animal species, and another 829 general environmental indicators.

The researchers claim that 90pc of the environmental disruption and damage around the world, from the availability of water to the early flowering of plants, can be attributed to warming temperatures driven by human activity.

The report also highlighted Australia's lack of research in this area: of the tens of thousands of examples, only a handful of useful studies came from Australia.

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Date: Newest first | Oldest first
World food stocks are declining - global transport costs are rising.

The rudd government needs to create a positive environment for australian food production so that australia can be self sufficient and able to export to our asian neighbours.

Posted by outback g, 26/05/2008 4:49:48 PM

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