is the snowball rolling?

[jensend]

http://www.earthtimes.org/articles/show/217143,financial-market-losses-could-top-1600-billion-dollars-report.html

if this is true what effects will canadian farmers feel?

[agstar77]

We are already feeling it, inflation will continue to increase forcing reluctant central banks to raise interest rates. History is destined to repeat , it is not different this time. Credit card debt is out of control, the housing bubble is still alive in Canada. The only saving grace for this country is the resource sector. Governments are clearly afraid of Stagflation and are doing anything to deny, deny,deny. Prepare for the worst and hope for the best. Perhaps there will be a soft landing but don't bet on it. Banks are scrambling to get back to their core business clients.

[parsley]

The food industry is fighting to keep their profit dollars while the farmer is fighting to increase his profit dollars. It's all about dollars:

QUOTE

Food prices high on the agenda at G8 summit

By Lindsey Partos

07-Jul-2008 - The global food industry will be tracking events at this year's G8 summit that starts today in Hokkaido, Japan, with rising food and energy prices set to dominate the agenda.

With commodity costs impacted by double-digit rises, and compounded by energy costs that saw oil top $145 a barrel last week, the food industry will closely observe food policy discussions by the G8 - the US, Japan, France, Britain, Germany, Canada, Italy and Russia - that could bring some future relief to costs in the supply chain.

While food industry players will hope G8 leaders discuss the role a new system of food reserves and stocks could play in reducing the risk of future price escalations, biofuels, in particular, will be a key issue set to ignite heated debates.

In a move towards renewable energy sources,the EU-27 bloc has set a proposed EU target of 10 per cent of energy from biofuels by 2020. But increased demand for biofuels - notably corn and wheat - has been blamed in part, for constant upward pressure on food prices, and the consequent increase in costs for a food industry that must now compete with biofuels for their tightening stocks of raw materials.

Earlier this year, concerned about the EU policy on biofuels, Europe's food and drink body, the CIAA, called on Europe to take a closer look at strategy and the impact on sustainability.

"While the proposed EU directive on the promotion of the use of energy from renewable sources introduced a number of improvements compared to earlier drafts...These elements are far from sufficient to address core food and drink industry concerns as regards the potential impact the policy will have on the availability of raw materials for food and feed production," warned the Confederation of the Food and Drink Industries of the EU.

Further, citing the ongoing food price phenomenon that has seen world prices of wheat, grains, rice and oilseed crops double between 2005 and 2007, the CIAA attested that the "directive should offer Member States a mechanism for the temporary suspension of national biofuels targets to prevent crisis situations."

Stoking the fire, UK newspaper The Guardian writes today that biofuels have forced global food prices up by 75 per cent - far more than previously estimated - according to a confidential World Bank report obtained by the newspaper.

The paper adds that this considerable figure "emphatically contradicts the US government's claims that plant-derived fuels contribute less than 3 per cent to food-price rises."

And on the eve of the G8 summit, non-government organisation Oxfam calls for the world's richest countries to look again at mandatory targets for biofuels, criticising their role in the rise in global food prices.

"Rich world politicians are failing to acknowledge the impact of their own unfair policies. There is so much evidence about the negative impacts of biofuels that setting mandatory targets seems unconscionable," said Phil Bloomer, Oxfam's director of campaigns and policy.

Oxfam cites the World Bank that estimates increases in prices of wheat, rice and maize cost developing countries $324bn (€207bn) last year alone. Food inflation has wiped out 10 per cent of the GDP of Senegal, Haiti and Sierra Leone, and around 5 per cent of GDP in Vanuatu, Mozambique and Eritrea, according to latest World Bank analysis, writes Oxfam.

"Food inflation might cause pain in rich countries - but it is shattering entire economies and people's lives in developing countries," adds Bloomer.

UNQUOTE

[charliep]

The original thread idea was around instability in financial markets and potential impact on agriculture.

To the comments coming out of the G8 summit, will highlight that only couple of years ago, the complaint was about the level of subsidies in Europe and the US and the implications of high production in these two regions/low profitability in the rest of the world. Fast forward to the current time and the complaint is about these two regions developing an internal market for crops in biofuels and the price impact on the rest of the world.

Perhaps the common theme in both the above is government involvement. To the original points about inflation/impact on demand, maybe the world needs to endure some pain to encourage a change in behavior. Looking at crops, higher prices will be a signal to increase production around the world (not just Europe, North America, Australia and South America).

[TOM4CWB]

Good points Charlie!

We are expected to grow food for less than it costs....

Then when we find a way to stabilise prices... we are 'evil' and starving the poor people of the world.

SO what is the answer?

Food aid destroys 3rd world Ag economies... we are told...

CONSUMERS EXPECT CHEAP FOOD. SECURE FOOD. SAFE FOOD.

OIL can rise... that is OK...

[parsley]

Inflation....


.....that snowballl is melting, fast.

We have trememdous inflation, but governments are hiding it. They disguise it. And inflation is going to impact hard on markets.

With the stagflation that is rampant, but which our "leaders" do not address either, the effect upon the markets is going to shake everybody's teeth who has a loan at the bank, because I think interest rates are going to pop up like a champagne cork. And the markets are going to react.

Food will be the corkscrew.

Once prices for food, and land, and inputs, and machinery, and hail level off at the top, and not come down, inflation will finally be certified as "real".

The common denominator of the acceptability of an inflationary economy is agriculture. Everyone eats.

Parsley