The FAO’s food price index declined 0.9 per cent in December but increased 28 per cent in 2021, averaging 125.7 points, its highest level since 2011.
Bloomberg argues that Chinese food stockpiles are contributing to rising world food prices and questions why less than 20 per cent of the world’s population holds 69 per cent of the world’s corn reserves, 60 per cent of its rice reserves and 51 per cent of its wheat reserves.
Low food prices may be bad for consumers, but they are good for farmers. Indeed, Germany’s Agriculture Minister argues that food prices should rise further, arguing that “junk prices” drive “farms into ruin, prevent more animal welfare, promote the extinction of species and pollute the climate.”
Covid continues to disrupt supply chains, with supermarkets in the US and Australia running short of groceries. The FT asks (in a long read) if there is an end in sight to these supply chain disruptions. The newspaper concludes that there probably isn’t and that it might be time to start moving production closer to consumption.
Bloomberg argues that freak weather and climate change will continue to disrupt our food supply long after Covid’s effects wear off. Unfortunately, the FT agrees. For example, unseasonably low rainfall across southern Africa threatens harvests and could lead to higher regional food prices later in the year.
Even food-producing countries are not immune. After palm oil surged to a record in October 2021 and posted a third straight year of gains, Indonesia’s government has said it will spend 3.6 trillion rupiahs ($250 million) to subsidise domestic cooking oil prices.
California’s Port of Oakland has said it will open a new container yard for agricultural exporters struggling with capacity shortages and high freight costs. Following delays due to flooding in Vancouver Port, farmers are resorting to desperate measures to export their produce, chartering three 747 aeroplanes to fly potatoes to Japan.
In environmental news, deforestation and other clearances of native vegetation in Brazil’s Cerrado rose 8 per cent to 8,531 sq km in the 12 months through July, the highest level since 2015. And in India, the BBC traces Delhi’s smog back to farmers’ poor water management.
A switch from arabica to robusta coffee could be one of the top consumer trends for the next few years as climate change makes arabica more challenging to grow. Changes in the way farmers grow, and process robusta could make it more palatable. Some predict that world robusta production could soon exceed that of arabica. (Meanwhile, for you coffee lovers out there, Seeking Alpha has an interesting piece on the speciality coffee sector and how the major brands are profiting from rising demand in Asia. )
On the good news front, scientists are genetically engineering soil microbes to reduce methane emissions from rice paddy fields.
Indonesia’s President has revoked more than 2,000 mining, plantation and forest-use permits due to non-compliance or because they had been unused. He said he was acting to improve governance and transparency in the natural resources sector.
The UK government will pay farmers in England to rewild their lands and has invited bids for 10-15 pilot projects, each covering at least 500 hectares and up to 5,000 hectares, to a total of approximately 10,000 hectares in the first two-year phase. Funding for the project could reach £700 – £800 million a year by 2028.
The Guardian is worried that these measures, plus others, will lead to a decline in UK farm production and increased food imports. A UK Parliamentary Committee has come to the same conclusion, arguing that the UK government has not established any way to measure whether £2.4 billion of annual post-Brexit farm payments will provide value for money.
Across the pond, the USDA will provide $1 billion in funding this year to support independent meat processors and ranchers as part of a plan to address a lack of “meaningful competition” in the meat sector.
In company news, Cargill has paid €915 million to acquire the majority of Croda’s industrial chemicals business. The acquired business sells nature-derived alternatives to chemicals now commonly made with petroleum used in products ranging from plastic mouldings for cars to food and beverage packaging.
The container shipping giant Maersk has acquired Hong Kong-based LF Logistics for $3.6 billion. The acquisition will add 223 warehouses to Maersk’s existing portfolio, bringing their total facilities to 549 globally. However, Maersk’s stated intention to transform itself into a logistics provider is causing conflict within the company.
The Chicago Board of Trade has sold what was formerly its largest trading floor at 333 S. La Salle St. to an electricity company that will transform it into a sub-station. CME closed most of its trading floors in 2015.
Finally, here is some new research on the top US states in renewable energy production.
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