From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Mon Jul 09 2007 - 16:28:44 EDT
12/12/2005 - The food industry continues to sit at the bottom of the pile when it comes to investing in research and development, an annual study shows. The study, published every year by the European Commission, shows food producers worldwide are still last on the list of the top 15 sectors when it comes to spending on R&D, even as their sales continue to show sluggish growth in many markets. (...) By comparison, the highest spenders on R&D globally were companies in the automobile and parts sector, which collectively spent a total of 58.5bn euro on R&D, or an average of 900.3 mn euro per company. http://www.confectionerynews.com/news/ng.asp?n=64500-unilever-nestle-research-and-development From an agricultural vantage point, the automotive demand for fuel is insatiable. The grain it takes to fill a 25-gallon tank with ethanol just once will feed one person for a whole year. Converting the entire U.S. grain harvest to ethanol would satisfy only 16 percent of U.S. auto fuel needs.(...) The stage is now set for direct competition for grain between the 800 million people who own automobiles, and the world's 2 billion poorest people. The risk is that millions of those on the lower rungs of the global economic ladder will start falling off as rising food prices drop their consumption below the survival level. Soaring food prices could lead to urban food riots in scores of lower-income countries that rely on grain imports, such as Indonesia, Egypt, Algeria, Nigeria, and Mexico. The resulting political instability could in turn disrupt the global economy, directly affecting all countries. (...) As the leading grain producer, grain exporter, and ethanol producer, the United States is in the driver's seat. We need to make sure that in trying to solve one problem - our dependence on imported oil - we do not create a far more serious one: chaos in the world food economy. http://www.earth-policy.org/Transcripts/SenateEPW07.htm Increased demand for bio-fuels is causing fundamental changes to agricultural markets that could drive up world prices for many farm products, according to a new report published by the OECD and FAO. The OECD-FAO Agricultural Outlook 2007-2016 says temporary factors such as droughts in wheat-growing regions and low stocks explain in large measure the recent hikes in farm commodity prices. But when the focus turns to the longer term, structural changes are underway which could well maintain relatively high nominal prices for many agricultural products over the coming decade. Reduced crop surpluses and a decline in export subsidies are also contributing to these long-term changes in markets. But more important is the growing use of cereals, sugar, oilseed and vegetable oils to produce fossil fuel substitutes, ethanol and bio-diesel. This is underpinning crop prices and, indirectly through higher animal feed costs, also the prices for livestock products. (...) The report points out that higher commodity prices are a particular concern for net food importing countries as well as the urban poor. And while higher feedstock prices caused by increased bio-fuel production benefits feedstock producers, it means extra costs and lower incomes for farmers who need the feedstock to provide animal feed. http://www.fao.org/newsroom/en/news/2007/1000620/index.html Corn prices have risen about 60 per cent and wheat about 50 per cent over the last 12 months. Sugar, milk and cocoa prices have also surged, prompting the biggest increase in retail food prices in three decades in some countries. The Nestlé chairman cited population growth, rising demand from "the phenomena of India and China" and the use of food products by biofuel producers as causes of pressure in international food markets. Reports from two international organisations this week forecast food price rises of between 20 and 50 per cent over the next decade. But some analysts believe the long-term risk of higher food prices is exaggerated. Julian Jessop, chief international economist at Capital Economics in London, said biofuels producers would develop technologies that required less raw material or used non-edible parts of food. "There are good medium-term reasons to think that the biofuels price shock will pass," he said. http://www.ft.com/cms/s/3a674134-2b1c-11dc-85f9-000b5df10621,_i_rssPage=61e21220-6714-11da-a650-0000779e2340.html According to the Bureau of Labor Statistics, U.S. families spent fully 43% of their incomes on food in 1901. By 1929 it had dropped to 24%, and by 2004 the figure was 14%. But as income growth slows and food prices increase, this happy long-term trend may be coming to an end. http://www.marketwatch.com/news/story/why-rising-food-prices-eating/story.aspx?guid=%7BE2C47792-2693-48BF-8967-26B070F10EBF%7D&dist=TNMostRead The Chinese government reported on Mar. 13 that February consumer prices advanced 2.7% year-on-year after gaining 2.2% in January. About one-third of China's consumer price index (CPI) is weighted toward food prices, which actually jumped 6% year-on-year. In India, the situation is even more alarming. The key inflation number in India is the wholesale price index, which shot up 6.7% year-on-year in February and is also a third weighted to food. "Primary food articles such as rice, wheat, pulses (used in food products and animal feed), and oilseeds have been the main driver of inflation" in India, Lehman Brothers analysts Sonal Varma and Rob Subbaraman noted in a Mar. 9 report. http://www.businessweek.com/globalbiz/content/mar2007/gb20070313_842457.htm?link_position=link8
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