Walshe comments on rising food prices

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. ‘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. ‘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. ‘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 five percent, the increase in the food element of the index was only 2.6 percent. 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 percent of the consumer price index, compared to over 20 percent a decade ago. Furthermore, the farmers’ share is typically about 30 percent 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.