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Weekly Overview: Adverse Weather, Bird Flu Increase Global Food Supply Challenges

24 October 2013

ANALYSIS - Adverse weather in Argentina has hit the wheat harvest, creating a shortage of grains there and underlining the precarious nature of the global food supply. Meanwhile, bird flu in Nepal, Cambodia and Australia only adds to the challenge of feeding the growing human population.

As more grains are needed for animal feed to increase meat and protein production to feed a growing and wealthier global population, wheat is becoming a major driver in the world grain market, according to Jack Watts, senior analyst for cereals and oilseeds at the UK's Agriculture and Horticulture Development Board (AHDB). He was speaking at the Home Grown Cereals Authority's Grain Market Outlook Conference in London last week.

He added that there is currently more risk to the world's cereal markets and in particular, more weather risk.

Highlighting this point, it was reported last week that maize and wheat are in short supply in Argentina. Wheat prices are reported to be sky-rocketing and livestock farmers say there is not enough maize (corn) to go around.

The difficult corn situation has been blamed on a shortfall of up to four million tonnes between the forecast and actual harvest figures, while poor weather has hit the country's wheat crop. Prices for the new harvest, which starts in November, are at US$500 per ton for immediate delivery while in Chicago, the price is US$250 a ton.

Continuing on the theme of feed grains, a judge in Mexico has ordered the government to stop issuing permits to multinational companies for planting genetically modified (GMO) corn at an experimental or commercial scale.

Mexico banned the planting of GMOs back in 1998 but that law was modified in 2005 to allow the planting of test plots. The judge cited the risk of imminent harm to the environment as the basis for the latest decision. There are fears that the many native corn varieties in Mexico could become contaminated if GMO corn is planted. Corn is the country's main food staple.

Meat consumption in China is expected to rise by 35 per cent by 2020 while rice and flour consumption will fall by five per cent each, according to Sylvia Ren, also speaking at the Grain Market Outlook Conference.

Consumption of cooking oil is also expected to rise by 35 per cent while sugar consumption will go up by 52 per cent and consumption of dairy products will rise by 116 per cent.

The reason for the sharp change in eating habits is the change in the Chinese population to a wealthier more urban people, she said.

The outlook is for a growth in the demand for protein to be between four and five per cent over the next five years although demand for meat and eggs will only rise by one or two per cent, according to Ms Ren.

Livestock diseases also threaten global food supply, among them, bird flu. A second egg farm in the Australian state of New South Wales has been quarantined after tests found the H7 influenza A virus at the property. It is in the same area as the original outbreak.

Poultry farmers in Western Kathmandu, Nepal, are refusing to accept the compensation offered by the government following the recent H5N1 flu outbreaks, complaining that the rates are too low. A young Cambodian girl has become the country's 21st victim of H5N1 flu this year.

Jackie Linden

Jackie Linden

Top image via Shutterstock

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