Feeding Frenzy

While the world is transfixed by the bare faced cheek of Harry von Hosenrunter there are a few things going on.  Not least is Tropical Storm and potential Hurricane Isaac heading for the scheduled Republican Convention in Tampa, Florida.  That the storm in question should have such a name, both of the Bible and the Qur’an ought to give us all pause for thought.

To add to the joy of all doom mongers there is another storm following on across the Atlantic which at the moment could be heading for Massachusetts, where Mitt Romney was formerly Governor.  Isaac could well give the Caymans a bashing where much of Romney’s money went.  Is someone trying to tell us something?

There are other matters as well.  In Russia there is the question of whether there will be any grain exported at all this year.  This is happening at the same time as grain shortages could occur in the US and a high proportion of that harvested may well have to be turned into ethanol to help keep gas (petrol) prices down.

In the UK weather conditions and other problems, notably a major reduction in the bee population could seriously deplete food production.  In any case the dire effects of the combination between the EU agriculture requirements and supermarket pricing are putting many UK farmers and farms at serious risk. 

As for Europe, if the Euro collapses or its complications result in major economic contraction this will impact on agriculture just as much as any other sector especially as the agriculture budget is the big beast of Brussels.

In Australia it is now argued that the mining boom has topped and it is possible some retrenchment may occur.  One reason amongst many is that production in China may not be expanding but at best might be relatively static.  One could go around the world and find a distinct shortage of good news.

The recent row over the news that some at Glencore, one of the world’s major trading and finance corporations sees food shortages as good for commodity and other traders is provoking strong reactions.  There is the inevitable argument that speculation helps to modify price swings as opposed to exacerbating problems.

This will depend on what speculation, how this is translated into distribution at what range of prices and who finishes up with most of the loot.  Given recent history there is every prospect of the market and prices being rigged in favour of the few and their political friends.  This is not the same as open market and pure speculation by large numbers of independent operators.

What we all ought to be worried about is if there may be a world wide category shift in the price of food on a permanent basis.  That is, it is going to be much more expensive in the stores and some foods may rise more sharply in price than the average.  If such foods are those which are part of the basic diets of many people this means trouble.

It will be politically, economically, socially and internationally big trouble.  I can recall the time when food took a much higher proportion out of family budgets than at present and that in a world of tight margins for the majority of people.

But then there wasn’t much debt around because for most ordinary people credit was hard to come by.  In the financial world there was nothing remotely like the leverages common today either in trading or in ordinary banking.  So a major upward in price shift in basic budgets will hit all the harder.

Perhaps we should all start praying whatever our beliefs may happen to be.