Mark’s Blog – The Green, Green Grass of Home (Fed Beef)!

Have you noticed food prices going down in your supermarket?

No, neither have I but apparently in August, food prices went down for the fourth month in a row with a 3.7% fall in the cost of  vegetables.

The bad news is it ain’t going to last.

Overall, food prices dropped 0.2% which  probably doesn’t make much of a difference to your weekly shop when you factor in how prices for poultry, beverages and dairy increased.

What is really interesting though is that what it all comes down to is the fact we grow our own food and that means we should always be okay.

Of course, as a remote island nation, New Zealand has to import a lot of stuff from oil to machinery and electronics. But because we are one of the biggest exporters of food  (for our size),  we will have some money to pay for it.   That is, if we don’t spend it all on a new house.

The Japanese bank Nomura  has released a survey of 80 countries which shows New Zealand is the least vulnerable to rising food prices, which is good news.

Demand for our commodities such as meat and dairy has rebounded after the worst of the global recession.  Our beef and lamb are especially in demand.  Only problem is with the droughts of last summer and the number of dairy conversions, the supply of lamb and beef is hard to find.

The other factor is that Russia has had a huge drought which has decimated its wheat production so much so that they have banned any exports of their grain.

Russian grain is a major feed source for the beef industry in many parts of the world.   Of course, because our beef is fed on lush green grass, we in New Zealand are not affected by this lack of grain.

I always remember the story of the shopper in the Los Angeles supermarket seeing a NZ beef label stating, “This beef is produced from grass fed cattle.”  The shopper questioned this saying, “Surely you can’t feed cattle on just grass!”

Anyway back to the survey, and according  to the Bank Nomura,  the higher the GDP of a country, the lower the amount spent on food , and the more food  a country exports, the higher it is ranked.   Hence, New Zealand’s top ranking.

We rated least vulnerable because food makes up 20% of consumer spending here while for vulnerable countries, it is 50%.

Mind you the dark clouds are growing with the bank predicting a surge in food prices larger than any time since the early 1900s.