Wednesday, November 11, 2009

Reality behind cheap food

UK produce industry struggles on

A possible explanation for the lack of food inflation is the existence of food production matching demand at a certain price point. This price point has collapsed with the economy. Accordingly fresh produce producers(!) have struggled on making a loss. Over the New Year will be a shakeout as these losses become unsustainable. This will reduce competition amongst the survivors. As competition is reduced prices will again reflect the costs of production and not the current over-supply. Probably this will be reflected in many sectors of the global economy, the days of global over-supply masking the dramatic fall of sterling may well be coming to an end.

Posted by stillthinking @ 04:09 PM (629 views)
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One thought on “Reality behind cheap food

  • Serendipity_my Ass! says:

    My sources tell me that farmers have taken large numbers of breeding stock out of circulation (especially sheep) and that the price per kg for lamb and beef is rising rapidly as supply to abattoirs has dwindled. So, expect inflation soon in these sectors…

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