Trash Blanc

Whilst economists around the world fret about sub prime loans and $100 barrels of oil, here at TrashBlanc.com we have eyes on the bigger picture. Food. Well it seems that the bean counters over at the Financial Times are starting to pay attention too. They’re reporting some recent Goldman Sachs warnings over spiraling agriculture prices.

Jeff Currie, head of commodities research at the US bank, says with disarming cheer: “We think we could go into crisis mode in many commodities sectors in the next 12 to 18 months . . . and I would argue that agriculture is key here.”

The FT points out that this is happening surreptitiously. It’s all eyes on metals and minerals right now. So developing nations are going to be hit first and hardest, but this tsunami of high prices will spread to your local Tesco.

The overall point here is pretty obvious. Whilst we in the SUV driving West are fretting about the cost of driving to Tesco and the cost of our dodgy mortgages, the bigger issue in the world is putting dinner on the plate.

Inhabitants of the western world typically spend far more time worrying about the price of petrol for their car, rather than the price of wheat or corn. And when western investors do think about “commodity shock”, their reference point typically tends to be the 1970s oil crisis.

However, as Mr Currie observes, this is a dangerously blinkered view. Back in the 1970s, famine touched a much bigger proportion of the world’s population than the energy crisis, he says. And even today, rising food prices pack a powerful political punch in the developing (or partly-developed) world, to a degree that is sometimes under-appreciated by the pampered west.

Indeed, there is already ample evidence that political tensions are building: the World Food Programme, for example, now thinks a third of the world’s population lives in countries with food price controls or export bans.

Econmics