Blog about the upcoming food shortage crisis

Everybody throws stones at the prophet, but when the crisis comes they yell: “Why nobody warned us?”

Grains and Brazil in focus as food inflation moves to forefront

March 13, 2008, by Jonathan Ratner

With the global population, ethanol use and incomes in the developing world all on the rise, the topic of food inflation comes up a lot more these days. One of the key drivers of this trend is solid demand for soft grains, which are used both for food and feedstock, according to Deutsche Bank Latin America equity strategist Guilherme Paiva.
The bank forecasts that consuption of these grains will grow 3.2% annually between 2005 and 2015, and another 1.7% through 2050. In fact, it estimates that demographics will account for 36% of the demand growth during this 45-year period, biofuels 26%, and better living standards 38%.
Brazil, which is the only country in the world with a large stock of potential arable land that is unused, also has an ample water supply, weather patterns that are favourable for agriculture, proximity to the U.S., and geopolitical stability, Mr. Paiva said in a research note. So it clearly stands to gain from stronger demand for soft grains.
But food inflation will likely produce some losers as well, he suggested. While farming, fertilizer, logistics and equipment producers should benefit, beverage and food makers are at risk. The outlook is somewhat uncertain for producers of beef, pork and poultry, the strategist said.
Jonathan Ratner



March 13, 2008 - Posted by | Uncategorized

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