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Henry Walsh: The world is in for a shock with food price hikes

We are facing a scenario not seen in generations, where demand is greater than supply as a decline in fertiliser use leads to a drop in production

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Feeding the world: An abundance of internationally traded cheap grain, like this field of corn, was the cornerstone on which affordable food was built

Feeding the world: An abundance of internationally traded cheap grain, like this field of corn, was the cornerstone on which affordable food was built

Feeding the world: An abundance of internationally traded cheap grain, like this field of corn, was the cornerstone on which affordable food was built

This time last year I wrote about the rapidly increasing world population, noting that not a single EU policy was concerned with food security or availability.

This week, EU Agricultural Commissioner Janusz Wojciechowski visited Dublin for the World Potato Conference and attended a meeting of the IFA national executive.

After months of denial by both him and other leaders that the invasion of Ukraine would impact on food availability in Europe, he has finally come out and said food security is now a top priority for the EU.

The world has been walking a food security tightrope for several years. Global commerce had become very lean, very internationalised and very efficient.

But the danger with a tightrope is that the smallest thing can throw you off. Remember, a few years back, just one boat blocked the most important shipping route in the world, the Suez Canal.

Now, global transport is still unreliable and multiple times the cost. I fear that the war in Ukraine has fundamentally altered the economics of EU food production for the future.

An abundance of internationally traded cheap grain was the cornerstone on which affordable food was built.

Corn is an incredible feed that can be eaten by humans in its natural form as cereals or bread or it can be fed to produce chicken, pork, beef or milk.

Up until very recently it traded at the same price as it did in the 1970s. This has now changed dramatically, due to a sharp increase in the cost of production which is likely to lead to a drop in production — and a scenario not seen in generations, where demand is greater than supply.

The developed world, particularly European citizens, are in for a shock with the rate of food inflation that is about to hit them — a figure of 8pc is being bandied about.

Yet many of the major costs to produce food — fertiliser, feed and oil — are up well over 100pc.

In the past, the powerful retailers have simply refused to give a price increase to suppliers.

The retailers will continue to squeeze suppliers, particularly own-brand suppliers, who have signed contracts. They will do this even if the producers go broke, because that’s what the big retailers have been doing for decades, while legislators and consumer watchdogs turned a blind eye, so long as they continued to supply food as cheaply as possible.

This year the EU Ag Commissioner will get his wish with at least a 20pc drop in fertiliser usage due to the exorbitant cost (and to a lesser extent availability), but this could become a nightmare for consumers when production drops and demand continues to increase.

Last week I had a long chat with a dairy farmer who has been producing organic milk for over 20 years.

He is locked in to a 12-month fixed-milk-price contract and the buyer was not willing to renegotiate because the retailer was not interested in his “yarn” about increased costs.

The farmer told me the price of organic grain had rocketed to €700/t. We are in uncharted territory

And remember you and I are consumers, the same as everyone else in Europe. The difference is we are also food producers.

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This field is required

Back on the farm we are slightly tight for grass after an excellent spell that allowed us to take surplus bales and reseed 5pc of the MP, with another 4pc sprayed today for re-seeding next week.

This year in our efforts to establish clover we are sowing 2kg+ of clover seed per acre and grazing the new re-seed every time it has a cover of 800.

Milk output has dropped a little to 23.5L at 4.35 fat and 3.8 protein or 1.97kg/ms.

We increased the meal to 3kg this week and 4kg of zero grazing for five days to help support farm cover — currently 120 per cow.

All cows have been AI’d and now we are hoping for a good conception rate.

Henry and Patricia Walsh farm in Oranmore, Co Galway along with their son Enda and neighbour and outfarm owner John Moran


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