PACIFIC: Inflation affects basic foods
Updated
Pacific Island nations are being told to expect to pay more for food in the future. There are concerns in island nations, particularly about the cost of modern diet staples like flour, rice and dairy products.
Presenter: Campbell Cooney
Speakers: Nancy Morgan, Commodities analyst with the UN's Food and Agriculture Office.
MORGAN: I was looking at the statistics for the Pacific Islands and basically they import about 560-million dollars worth of agricultural commodities, but of 24 per cent of that are cereals, and now cereal prices are up probably, like the wheat prices are up 82 per cent from last year at this time. I mean that's just incredible, I mean all of a sudden you're going to be finding these countries really they're going to have to cut back on their imports and consumers, it's going to fuel food inflation that is really problematic.
COONEY: Can you see it becoming an even major problem or an especially bad problem for those places that just cannot grow what they need?
MORGAN: Yes I would think so and it all depends on their agricultural portfolios. And when I mentioned say for example the share of cereals in total imports it varies by the countries, when you look at Micronesia they're already up to 40 per cent of their imports of cereals. Countries all over the world from Germany to China to Fiji are all complaining about high food price inflation.
COONEY: Nancy Morgan's a policy officer and commodities analyst with the United Nations' Food and Agriculture office, the FAO.
And right now it, and other groups are forecasting food in the Pacific's about to get dearer.
Last week an increase in wheat prices led to calls in Fiji for its interim government to subsidise its cost.
The Indo-Fijian population there means a bigger consumption of flour based products than other Pacific Island nations.
But more and more those nations are relying on flour, rice and dairy products to make up their staple foods.
And to supply that need, in the Pacific, you rely on imports.
Right now things like drought and domestic demand in the countries which produce those foods, means they cost more.
But Nancy Morgan feels there's a couple of extra factors driving up the cost.
First is the profit motive.
MORGAN: In Australia I mean you normally have a 25-million ton crop and now it's down to 12. But unfortunately this year it was not only Australia, but it was South Africa has a low crop, the EU has a low crop, the US has a relatively robust crop, at least for wheat, but they were coming from stock levels that are the lowest since 1982. So all of a sudden, all of the factors are conducive to have huge speculations in prices that leads to people putting money into futures and pushing prices up.
COONEY: The other factor is fuel prices and the global push to replace the use of oil, in part at least, with biofuel, produced by plants and crops.
It's a noble desire.
Unfortunately crops like cereal, sugar, and oilplant, are the ones being targetted for fuel production.
Consumers basically have a choice between putting it in their mouth, or putting it in their fuel tank.
That's led to concerns that the crops which can be used in the Pacific to replace dearer imported food, may also become biofuel.
Nancy Morgan again.
MORGAN: That's a big issue in terms of all the US using corn, a food crop as input into biofuels. And also there's an interesting issue in terms of food security probably in the Pacific and certainly in Africa is the palm oil prices have literally gone, like over 800 dollars a ton now. They've gone up 90 per cent.
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COONEY: But can Pacific Island nations produce enough food to replace imports?
Nancy Morgan says the world market, and its fluctuations will affect what and how much island nations can afford to bring in.
MORGAN: It's all priced and I really do believe everybody always says doom and gloom when prices go up so high, like in 1996 the US corn prices were even higher than they are now. And in fact producers respond and they increase production and prices go down.
