We can expect food prices to continue to rise sharply over the next decade. Why? Developing countries are seeing growth in urbanization and affluence and of course population growth. With that comes changing diets and, you’ve got it, greater consumption of Western foods. Also driving up food prices is the high cost of oil (think transport and fertilizers) and demand from biofuel producers.
As for oil, speculators are buying oil at today’s prices in antipation of continued price rises so they can sell it back to the market for profit in the future. This is a significant driver of today’s oil price rises. Also, despite nearly a 60% increase in oil prices, exports have fallen. This is partly due to the increasing domestic needs seen in oil producing regions (just look at the growth in places like Dubai and Russia - they need more of the black gold for their own domestic economies).
Demand for oil in China and India is also going to continue to grow.
In the OECD, we benefit from low priced goods from the developing nations but their rapid development will continue to place demand pressures on food and oil. Hopefully that will spur increased production and supply to keep price rises somewhat in check.
To read more, go to:
http://www.oecd.org/home/0,2987,en_2649_201185_1_1_1_1_1,00.html
http://online.wsj.com/article/SB121200725158327151.html
Cheers
Tom
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment