Food prices soaring on international markets

Impact of international markets: Economists Katie Dean, Riki Polygenis and Amber Rabinov estimated food prices would rise 5 per cent this financial year and were unlikely to retreat much because developments in international markets would outweigh the benefits of any return to normal seasonal conditions.

Massive price increases due to global demand, constrained supply: An increase in global food demand at a time of constrained supply had helped drive massive growth in many basic foodstuffs. In the 12 months to September the price of barley had soared by 128 per cent on global trading exchanges, while wheat had gained 60 per cent and dairy products such as powdered milk had surged 79 per cent. Adverse weather conditions had hit grain crops, with growth forecasts for global wheat production in 2007-08 slashed from 5.4 per cent to 1.7 per cent.

Long-term constraints in food supply: Climate change and a decrease in arable land because of population growth, industrialisation and environmental degradation threatened to constrain food supply in the long term.

The Australian Financial Review, 19/10/2007, p. 18

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