The price of food is about to get a whole lot higher as a
result of the mass slaughter of cattle stocks worldwide, which itself is a
result of persistent drought conditions that have caused a shortage of staple
food items, and a subsequent spike in animal feed costs. According to a new
report out of England, the end result of this disastrous phenomenon will be a
14 percent overall jump in food costs throughout the next year, as food costs
reach their highest levels ever on record.
The U.K.'s Guardian reports that many farmers are slaughtering their
pig and cattle herds early, and in much higher quantities, because they simply
cannot afford the high and rising costs of animal feed. As we reported
previously, this action will result in lower meat prices in the immediate
future, but significantly higher meat prices down the road, as eventually there
will not be enough available animal stocks to meet demand.
"There will be an initial glut in meat availability as people slaughter
their animals to reduce their feed bills. But by next year, herds will be so
reduced that there won't be enough animals to meet expected demand and prices
will soar," says Nicholas Higgins, a commodities analyst and author of the
new report. "Farmers cut back pigs because they can rebuild them the
quickest. Replacement cattle take a lot longer to breed -- a year and a half
compared to six months for pigs."
Food prices across the board expected to rise dramatically
in response to drought
Reuters reports that the number of pigs slaughtered this year, at least in
the U.S., is the highest it has been in four and a half years, as the number of
hogs processed into pork rose four percent in August. Beef supplies have also
risen dramatically as a result of this mass slaughter, with beef stockpiles now
said to be at the third-highest level ever on record.
But at the same time as these meat stocks are increasing, the number of live
animals taking their place in feedlots and on pasture is decreasing, which is
highly problematic going into 2013. The U.S. Department of Agriculture (USDA)
is expected to disclose in an upcoming report that the overall number of
animals entering feedlots in 2012 dropped about six percent from last year, the
lowest level since 2008.
Staple crops like corn, wheat, and rice are also taking a
huge hit as a result of drought conditions, which are spiking their costs as
well. The New York Times (NYT) reports that a whopping 88 percent of
the U.S. corn crop, for instance, has now officially taken a hit due to lack of
rainwater, which will eventually result in higher prices for foods made with
corn.
"We're seeing the price of wheat, corn and beans go up," says Marc
Sadler, head of the agricultural risk assessment team at the World Bank.
"Food wheat is about bread and cookies and instant noodles. But it's about
instant noodles in Asia and Indonesia as much as it is about what you're going
to buy in Walmart."
(Source)
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