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IFA Warns Us Not To Exaggerate Food Commodity Prices

29 August 2007

IRELAND - IFA President Padraig Walshe said that some food commodity prices have risen substantially in recent months, and while this will have some impact on food prices and general inflation in Ireland, the impact should not be exaggerated.

He said: “After many years of uneconomically low food commodity prices, the balance between supply and demand in world food commodity prices are beginning to move in favour of producers. This is driven by a number of factors including the impact of climate change on production, rising food demand from population growth and income growth in Asia in particular, and a shift in land resources from food to energy crops.

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producers of beef, lamb, pigmeat and poultry have received no price increases, although their costs of production, particularly animal feed prices, have risen dramatically.

Padraig Walshe

“To-date the products affected are cereals and dairy products, and farmers here have seen some significant increases in the prices they receive for these products. On the other hand, producers of beef, lamb, pigmeat and poultry have received no price increases, although their costs of production, particularly animal feed prices, have risen dramatically.

Padraig Walshe continued: “I want to point out to consumers that even with the higher prices of wheat and malting barley, the farmer’s share of the price of a standard loaf of bread retailing at about €1.20 is only 14c, and the farmer’s share of the pint of beer retailing at about €4 is only 1.4c.

“The latest CSO data on inflation in Ireland for the year to July shows that while the increase in the total consumer price index was 5%, the increase in the food element of the index was only 2.6%. In other words, food prices have had a moderating effect on inflation up to now.

“Overall, food consumed in the home now accounts for only 10.8% of the consumer price index, compared to over 20% a decade ago. Furthermore, the farmers’ share is typically about 30% for the main food items such as meat and dairy products, and considerably less in the case of bread and also in the case of processed / value-added products. Inevitably the higher production costs now faced by pig, poultry and cattle producers will have to be recouped from the market over time; otherwise they cannot stay in production.

He added: “The commodity price rise is a worldwide factor, and shows that globalisation already applies to a considerable extent to agricultural markets. In the context of the WTO agenda, it would be unbelievably foolish for the EU to undermine its food production capacity just at a time when world prices have moved to a higher plane and when other factors such as security of supply, food safety, traceability and environmental cost of “food miles” will become more important than just price”.

ThePigSite News Desk



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