Food will be an issue for the global economy
Some experts have already warned the next significant war will be over water.
Water and good soil are vital components in producing the food we eat.
Launching his group’s annual results on Monday, IAWS chief Owen Killian warned food was about to become a strategic global issue: “That’s a worrying trend for everybody.”
When key business people in Ireland are sounding such wake up calls it is time to sit up and take notice.
Cynics may dismiss the warning as scare mongering. Such a line could be used to justify raising prices, they would argue. But the signs of significant price pressure are starting to emerge.
Two year ago Origin Enterprises, 71% owned by IAWS, bought wheat in London at £60 (€85) per tonne. This year it is £180 per tonne.
Combined, IAWS and Origin can offer a unique perspective, being at both ends of the food chain.
IAWS is active in Europe and the US in lifestyle foods while Origin is a huge importer of grains used in animal feed&. It also is a huge flour miller through Odlums, which it owns.
Last week Origin chief executive Tom O’Mahony gave similar warnings and Mr Kilian took up the theme again this week.
He said there was “a danger that in western Europe in particular we’re living in a little bubble. The population of Europe will fall 10% over the period when the world population will grow by 40% out to 2050”.
“We’re certainly living in a land of plenty in this part of the world,” he said.
But he highlighted the emerging concerns over water availability, critical to the production of every morsel we eat as well as the world’s soil. There are fears the erosion of soil quality for a wide variety of reasons will hamper food production at a time when demand will start to rise significantly.
Food is only emerging as a strategic issue for the global economy.
Russia announced recently it was considering a ban on wheat exports. It is the fifth largest producer in the world and “that’s the first sign or signal probably, that food may be strategic going forward and that’s a worrying trend for everybody”, said Mr Killian.
The report said Russia was considering the ban in an effort to put a cap on food price inflation in its home market.
Global reserves of wheat are down to two months’ supply. In effect we are living from harvest to harvest as rising demand, poor weather and the rush to find alternative fuels puts pressure on dwindling stocks.
Bord Bainne cannot get enough product to meet market international demand for a variety of dairy products and ingredients.
This is because as world living standards rise people in emerging economies migrate to dairy products.
Statistics show dairy demand rising 4% a year while dairy production increases 1%.
That fact alone suggests all of us will be paying more for food in the years ahead.
However, surging dairy prices suggest farmers may be facing a renewed era of recovery. This would see agriculture once more become the anchor industry in many countries as the sector struggles to feed a rapidly growing global population due to rise 40% to more than nine billion by 2050.
Given the unique grassland production base of Irish agriculture, those farmers who remain well placed to exploit the new dynamic that is beginning to impact on the sector.
Dairy groups such as Glanbia and Dairygold are well placed to capitalise on these developments.
Meanwhile, the message from the experts is that cheap food is rapidly becoming a thing of the past.
