Mar
31
More about soaring food prices…
March 31, 2008 | | 1 Comment
by Rachael
Average price for one dozen of U.S. Grade A eggs in 2008 Q1 was up 55% compared to the prior quarter, beating the 30-year high. According to the local trade industry, wholesale import price of eggs from the U.S. jumps from HK$200 for 300 Grade A eggs in the same period last year, to HK$360-400 this year, a leap of 80-100%. Local catering services mentioned that the increase in cost for eggs, unlike oil, is rather unavoidable since eggs could not be stored in stock as oil. Local Consumer Price Index exhibited that egg price incremental rate has long been on Top 5 out of all food categories since 2007.
From a report on marketwatch.com, the United Egg Producers pointed out that higher costs for corns and soybeans (feed-grains) “account for more than 50% of what it costs to produce a raw egg. In the past year, feed costs have shot up 15 cents to 20 cents per dozen eggs”. Increasing demand for biofuels, again, is one of the major reasons for more expensive feed-grains. Rising operation cost to cultivate egg-making chicken flocks thus transfers the burden onto consumers.
“Another factor keeping egg prices high in the grocery store is a decline in the number of chickens that lay eggs” as from the same report. “Under a voluntary industry-certification program, egg producers have increased bird-cage sizes the past few years, capping the number of chickens per barn. The number of chickens per cage is down to four or five birds, from six or seven…The Agriculture Department estimates the number of egg-producing chickens is 2% below 2007’s levels”.
International trading price for rice shot 30% in a day last Thursday. The second and third global rice exporters Vietnam and India announced they would further decrease volume of rice exported. One reason is that traders and manufacturers are stocking the piles from the world’s largest supplier, Thailand, for future better prices. Thai Baht’s continuing appreciation against US dollars makes up another reason. Increase in rice price came more drastic as the inflation only happened in the beginning of 2008, compared with relatively gradual increase in wheat and corn prices starting late 2006. Rice price in total increases 107% in 2008.
Harvest crisis, which greatly affects food prices as well, shall be discussed later on.
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I was reading the newspaper about people rushing to supermarkets to buy bags of rice. The scene just looks like a “rice run”. Somehow, I’m worried that this will become a self-fulfilling scare, with people buying more and more rice ahead of the anticipated price increase, but unconsciously accelerating the price rise with the sudden increase in demand.