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Thread: Food Prices Are Rocketing All Over Europe

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    Food Prices Are Rocketing All Over Europe

    The question is - where will it lead, what are the implications........

    Food prices are rocketing all over Europe

    Telegraph 31/05/2008

    It's not just 'us'. All over Europe, the rocketing cost of food and fuel is straining family budgets, stirring unrest and shaking governments. David Blair examines the roots and the impact of a widening crisis.

    Shoppers in Madrid strain for 20,000kg of free fish distributed by fishermen protesting against rising fuel prices.........

    It was dawn outside a Paris supermarket and President Nicolas Sarkozy, joined by his wife, Carla, mingled with the early shoppers. The presidential couple had arrived at Rungis, France's biggest chain store, the moment the doors opened.

    Mr Sarkozy's up-with-the-lark excursion from the Élysée was designed to make good his tributes on the campaign trail to "the France that gets up early and asks only to live from the fruits of its labour".

    But the president was taken aback by the prices he encountered. "Everything is really too expensive!" he exclaimed to a florist.eyes:

    Across Europe, millions of shoppers are echoing Mr Sarkozy's words. Anyone outraged by the cost of a trip to Tesco or Sainsbury's – or the price of filling their car – should know that they are not alone: the same bewilderment and anxiety is sweeping the Continent.

    Bulgarian bus drivers are going on strike. Italian fishermen will soon down tools. Lorry drivers have sealed off oil refineries across France. Even the fishermen of Belgium, hitherto a relatively obscure force in European politics, are due to mass in Brussels............

    This week, France's ever-troublesome fishermen, incensed by the rising fuel prices that threaten their livelihoods, blockaded Cherbourg. They made ingenious use of an old trick from the Napoleonic wars, draping underwater lines across the port's entrance to snarl keels or propellers. This time, the effect was to keep the British in rather than out: dozens of yachts were trapped inside the harbour.

    A study conducted by the French finance ministry has found that supermarket prices have risen by up to 18 per cent in the past two months alone. Butter, pasta and milk have all gone up by nine per cent since last year. If you buy a baguette on the streets of Paris, the price will have risen by anything from five to eight per cent.

    "Why would the baker sell his bread at one euro if he knows that at 1.2 euros he will sell as many?" asks Jocelyn Lohezic, a 39-year-old who makes around 1,000 baguettes every Saturday. "Prices will keep rising, that's for sure."

    Across the Rhine, things are much the same. Last year, Germans paid the equivalent of 80p for a litre of milk. Today, they will have little change left from £1. A loaf of bread has suddenly risen from £1 to £1.20. Eggs are up by the same margin. Only meat, with a price increase of a mere three per cent, has risen alongside the general rate of inflation. Every other category of food has comfortably outpaced Germany's retail price rises.

    "For me it just makes a big difference when I get to the checkout," says Melanie Müller, a 21-year-old florist in Berlin. "Dairy products in particular have gone up, so I buy more fruit. But those prices have risen by more than 15 per cent too."

    Miss Muller's worries are shared by millions more shoppers down in Spain. Nowhere in the entire eurozone has seen bigger increases in food prices: the latest estimate suggests that flour and milk have risen by anything from 23 per cent to 40 per cent in the last year, and eggs by 11 per cent.

    All this has pushed Spain's overall rate of inflation above four per cent – the highest level for a decade and double the European Central Bank's target.

    The concerns of ordinary families with falling living standards were central to Spain's general election campaign in March. Mariano Rajoy, the conservative opposition leader, seized on rising food prices to attack the Socialist government's economic record. The prime minister, José Luis Rodriguez Zapatero, won re-election anyway, only to face a looming economic crisis. Rising food and fuel prices are combining with a tumbling property market to bring Spain's economy to a shuddering halt. Economic growth is now slower than at any time in the past 13 years.

    Politicians across Europe are feeling the heat from this sudden outbreak of a distinctly Seventies variety of economic sickness. As a result, the world is about to witness a series of crisis meetings. First on the list is an emergency summit in Rome next week, called by the UN's Food and Agriculture Organisation. After that, our ministers will go to Geneva for a World Trade Organisation gathering. The peak of activity will come in July, when Gordon Brown and President Bush join other leaders of the rich world in Japan for a G8 summit.

    But they will find that the causes of this "resource crunch" are both global and complicated. Take oil prices, which now exceed $130 a barrel. The great oil crises of 1973 and 1979, which wrought havoc on Western economies and helped make Britain "the sick man of Europe", had a simple cause: big producers in the Middle East turned off the taps. First, Saudi Arabia led an Arab oil embargo in 1973 designed to punish the West for supporting Israel during the Yom Kippur war. Six years later, the Iranian Revolution threw another immense spanner in the works.

    This time, there is no problem with supply. All the Middle Eastern producers, including Iran, are pumping out their oil as fast as possible. While America wants Saudi Arabia to churn out even more, the truth is that the Arabs are selling us their oil about as quickly as they can. And with prices this high, they are enjoying a windfall worth hundreds of billions of dollars.

    Instead, the central issue is rapidly rising demand. China and India, with a combined population exceeding two billion – or one third of humanity – are transforming the global economic landscape. Both are enjoying sustained booms, with China's economy growing by at least 10 per cent a year and India's achieving eight per cent.

    Neither of these giants has much oil of their own. Both are buying as much of the stuff as they can on the global markets – and this has pushed up the price.

    As for food prices, the underlying causes are similar. Paul Roberts, the author of The End of Food, which presents a disturbing picture of humanity running down its essential resources, says that the world has entered "a perfect storm of natural and political disasters" – "drought in Australia, a bad crop in Canada and an overly aggressive biofuels policy in North America and the European Union".

    All this has hit world food supplies. No less than 100 million tonnes of maize will be grown in America this year for the sole purpose of filling fuel tanks instead of human stomachs – refined into ethanol to keep American motorists happy. Across the world, roughly five per cent of all the cereals grown are now being used to feed cars instead of people.

    But this is not as important as you might think. As with oil, the main problem is not the supply of food but massive growth in demand. Once again, the emergence of hundreds of millions of affluent Chinese and Indian consumers is the vital factor.

    "Asian countries that used to have average incomes of a dollar a day are now at the two dollar threshold, which means they don't have to rely on basic grain," says Kona Haque, a commodities strategist at Macquarie bank. "They can buy a bit more meat, and add a bit more protein to their diet. That requires vast amounts of grain."

    Not only are the Chinese and Indians eating more of everything, they are now buying almost as much meat as the rest of us. In China alone, 200 million tonnes of grain are being used to feed livestock to satisfy this rising demand for meat. All this food – twice as much as America uses for biofuels – is going into the stomachs of animals instead of people.

    Consequently, the world has consumed more food than it has produced in each of the past three years. Emergency stocks are steadily being depleted. Once, the EU encouraged farmers to grow surpluses: the famous food mountain and milk lake were either stored or dumped on world markets at derisory prices.

    But today, the Common Agricultural Policy no longer encourages surplus production. The world's remaining food stocks are being run down – by 50 million tonnes of grain last year alone.

    So high food and fuel prices are probably here to stay. Unless China and India become very poor very quickly – which would require a global economic catastrophe that would have far worse consequences than today's crisis – their new spending power will keep prices high.

    The only way of minimising the damage caused by this structural change is to grow more food. Partly this could be done by improving agricultural technology, or increasing fertiliser use, although the price of fertiliser is soaring, too. The other element would be to open up more land for agriculture – but that takes time. "It's a fight for acreage," says Ms Haque. "But even assuming a huge bumper crop, farmers will still have to cover their costs, so they're not going to cut their prices any time soon."


    World population? Western greed??: eyes: ---- and the prospect of famine and war all around the world?

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    Stil fits well with some olders news posted here on The Althing that more people are growing there own vegetables and the like. And it is indeed a worrysome trent to say at the least.

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