Food for thought as prices go on rising

Mar 5 2008 by Iain Laing, The Journal

THIS week the price of diesel is likely to hit the £5 per gallon mark, giving rise to continuing concerns about inflation in the near future.

The process of metrication in the pricing structure of petrol and diesel is a clever way of disguising what the real cost is to those who were brought up with gallons, but nevertheless the fact remains that there will be a huge knock-on effect across a range of commodity pricing this spring and summer.

However, what must concern the Government, and the majority of the population, has to be the marked increase in food prices. As a rule, the British, whatever other countries may think, tend not to demonstrate in a mass manner, with one or two exceptions such as hunting and perhaps more understandably global warming. But lessons of history teach us that expensive food has consistently brought people out onto the streets. That is far from what I am advocating, but nevertheless there are some lessons that should be well learned.

Wheat prices have increased by something in the order of 80% in the past year and stocks are now down to 10 weeks as opposed to the normal 20 weeks. While there may be ways to explain this away, particularly around the area of taking more crops for animal feed, Government intervention in food pricing is something which is essential, not only for a healthy population, but also (and in the not too distant future) to ensure the survival of this or indeed any Government.

It would appear that we can no longer rear pigs at a price which gives farmers a profit, and the agricultural base in the United Kingdom continues to be eroded. This is in a country which only 30 years ago was producing sufficient food to meet the needs of its own population.

In a world where there is an increasing demand for food, particularly with increasing affluence in the Far East and hopefully in due course in Africa, the problem is unlikely to diminish. Yet all the more reason why our own agricultural base needs to be expanded.

We do, however, live in a community in Europe which seems to encourage inefficiency in agriculture. And for all the hot air (is this why we have so much global warming?) that has emanated from Europe on this issue over recent decades, little is done to address the problem. The effect on inflation, and perhaps more seriously on deteriorating social relationships, is one which the Government needs to take heed of.

Business will certainly pay the price of reduced profits, as purchasing power across the population as a whole is diminished, but if politicians realise that they may too have to pay a higher price, it might just concentrate their minds on some of the actions that need to be taken. In the meantime they will no doubt continue to push out messages about eating five portions of fruit and vegetables a day without any acknowledgement that the price of doing this is rapidly going beyond the reach of so many people.

Bill Midgley is a Tyneside executive and former chairman of the British Chambers of Commerce.

This is in a country which 30 years ago was producing sufficient food to meet its population’s needs