March 14, 2008
Food Shortages Dictate Changes All Around
By Bernice Hurst, Managing Director, Fine Food Network
As consumers all over the world start seeing changes in their every day food bills, retailers, manufacturers, farmers, government officials and the media are all wondering what can and should be done about it. Leaving aside, for the moment, the food vs. fuel debate and other causes, price rises for most people are becoming too obvious to ignore.
In his first major speech since being appointed as the British government’s chief scientific adviser, Professor John Beddington told the Govnet Sustainable Development UK Conference that as prices for staples such as rice, maize and wheat continue to rise, the food crisis is likely to bite more quickly than climate change. Increasing wealth in developing nations will only exacerbate the situation by increasing demand for meat and dairy products which would, in turn, generate demand for more grain. As people become even more affluent, he continued, they look out for processed and packaged foods, which require greater energy use. Demand will eventually exceed both supply and the capacity to step up production.
BBC News reported that while Professor Beddington applauds the alleviation of poverty around the world, he believes that the implications need to be recognized. Professor Tim Lang of City University in London supported Professor Beddington’s comments, telling BBC News, “I welcome it, that a chief scientist would do this is a sign that he’s expressing what a lot of us out there feel is a very big shift in the food economy. There is a real, fundamental problem emerging in food policy that, frankly, has been under-recognized.”
Discussion questions: How should retailers prepare for potential food shortages and possibly long-term price increases? Are there ways that retailers can work with suppliers to make sure that consumers don’t lose out? If food prices remain high, what changes do you foresee in diets and merchandising assortments?
[Author’s commentary] The list of links that could be attached to this discussion is as long as a piece of string. Media in countries all over the world are flagging up potential price rises, food shortages, job losses, population shifts, riots and whatever other consequences anyone can foresee. Not many doubts are being raised about the basics even if the causes and effects are still debatable. Questions over how much and how soon action needs to be taken have to be resolved on a country by country, case by case basis, however.
BrainTrust
Recent Discussions
Discussion Questions
Poll
The more interesting question is how retailers should prepare for a direct strike by an asteroid, because they already deal successfully with food shortages every day. And, the potential of additional shortages is both expected and a reality. Short deliveries on some perishables are balanced by oversupply on others. “Hey, let’s put beef rounds on sale and then put on a play in the barn!” It’s not a mystery.
Consumers “losing out?” What does that mean, exactly? No pate? Double-digit percentage increases in the price of fresh eggs (happened recently with almost no press coverage)? Or, is it just a catchphrase to describe the entitlement attitudes generated by socialized governments that guarantee cradle-to-grave snugglies? Does it relate to Ryan’s unsubstantiated assertion that there is an impending global food shortage? If there is a food supply hiccup, it will be caused by the idiocy fueling the out-of-line increase in corn cultivation as Ed Dennis pointed out. (For a wonderful primer on this topic, read “The Omnivore’s Dilemma: A Natural History Of Four Meals” by Michael Pollan. Please, read this book. The inexpensive paperback version is now available at Amazon.com.)
In our country we should be more concerned about food consumption than food supply. Obesity is the more pressing problem and stems from overconsumption plus, YES, corn-based products (read the book, just read the book). Having been hospitalized for malnutrition as a child because my parents couldn’t afford food, I’m intimately acquainted with shortages. But today and for the last fifty years of my life food has been plentiful even for poor kids like me. I had to work in restaurants during college for the free meals, but I always ate well enough to both run and swim for my teams.
When you stop seeing obese people on the street or in the workplace, start worrying about the food supply.
This is why the drive to increase ethanol usage makes no sense.
Yes, food–and other–prices will continue to rise as growing world demand exceeds developing supply. That March has begun. The consumer will adjust as best they can as their standard of living changes, either upward or downward, and suppliers will work to create new paradigms to address the new situations.
As to the prophesies of Profs Beddington and Lang, are they professorial or a clear clarion call for a new food policy?
That’s a $64 question and it has currency. At the moment, I’m inclined to avoid prophesy for if you prophesy wrong, policy reactions can be premature or misdirected and nobody will forget it. I suggest retailers keep their eyes open for key emerging matters but meanwhile focus on serving their customers better than anyone else could serve them as the world turns.
Here’s a bit of breaking news, another reason why some farmers may switch out of grain, corn and other food crops in favor of grapes. Let them drink champagne!!!!
There are many issues converging: recession, food safety, changing climate conditions affecting the availability of products. All of those factors affect price and variety of what is or will be available to consumers.
Remembering that consumers will only pay for those things that provide value to them and that that value equation changes by product area and environmental conditions, retailers and manufacturers need to prepare to be MUCH more flexible than they are now. We are likely to see conditions like the low-carb diet craze: certain foods are in demand for limited periods of time.
You need to monitor sales, identify trends, and be able to respond to changes very quickly. If you know what your consumers want and can provide it you will be fine. Whoever does that best will be successful.
Food is cheap and has been cheap for a long time. Perhaps prices are starting to catch up. No one likes to see price increases. Especially when we have been spoiled by low prices for so many years. Nothing really needs to be done. Prices are set my the market of supply and demand. They are what they are. Don’t like high food prices? Then don’t pay them. Grow a garden. Shop at Aldi, Wal-Mart, and the day old bread stores.
In the US, pricing of food is generally not a function of availability, so much as it is a function of the ancillary costs (especially freight) that comprise these products. We are the supermarket to the world, so we have plenty of food to feed our internal needs. Some of our product pricing is reflective of farm supports, others reflect the impact of oil (especially oil hogs-like corn). As the market changes, we are still competing with the rest of the world for our food products, however the higher that the logistic costs remain (i.e. freight and storage), the easier and cheaper it is to purchase these products versus the rest of the world.
Food shortages are not yet apparent in the US. But food has been in short supply in the undeveloped world for decades. We see pictures of starving children in Africa and Malaysia all the time. Food shortages are typically due to uncertain weather (not enough rain, too much rain, etc.) or poor land management or WAR. Conflict does more to interrupt the food supply than anything except weather.
HOWEVER, we are now seeing for the first time how the misguided efforts of a small minority can disrupt food supply. Our nation has jumped upon corn as a renewable source of gasohol which has resulted in increases in most farm products as farmers switch from other grain production to the production of corn to supply the demand for the production of a fuel that actually cost more energy to make than is produced.
Several alternatives exist to this madness. The conversion of part of our automobile fleet to diesel would be a great start and boost efficiency about 25% per vehicle converted but none of our car makers has even offered us the option of buying a diesel powered car. Practically every car maker in Europe offers diesel options and diesel has become the preferred power source in Europe. Our inability to address our energy needs in a rational manner has resulted in increased cost of grain, feed and transportation, and has lowered the standard of living of most Americans. We still have a good reliable supply of food and that is what separates us from the third world but we will be our own undoing until this problem is met head on. Solutions are available now but a vocal minority is blocking our political will to tap current energy reserves, explore for new energy sources off our cost, construct new more efficient refineries and avoid wasteful expenditures of resources on inefficient methods of energy production.
There’s a small bit of U.S. and Euro-centric bias embedded in this question. What makes us think that in a global, free market with growing demand from China, India, Russia and other nations that U.S. retailers will have a lot of choice in these matters?
Is the issue really one of anticipated food shortages or shortages of low-cost processed foods? During the Great Depression, for example, annual U.S. per capita consumption of cabbage was roughly three times higher than it is today–presumably because (then) cabbage was cheap, plentiful and offered high nutritional value and (today) people would rather eat food that is more convenient and, while possibly less nutritious, tastes “better.” Really hungry people don’t examine a calorie’s pedigree too long, they eat what’s available.
Agricultural technology has advanced to the point that we can now predictably raise more food on less land and using fewer resources, but the “anti GMO” lobbies across the world bristle at the first suggestions of a biotechnological solution to world hunger. As a species we simply can’t continue to reject solutions out of hand because they don’t seem to align to our politics while we continue to complain about the problem.
So, let’s talk about the issue as it is. We want to have our cake and eat it too along with our neighbor’s cakes and pies. There are roughly six billion people on earth today. Our current model doesn’t allow us to feed all of them. In less than 50 years there will be nine billion people on earth. This isn’t a problem associated with a temporary hike in oil prices.
Over time the issue is going to be accessing food…period…not how much a Twinkee costs.
In terms of the direct question, retailers COULD begin teaching consumers how to live better with, and on, less but I doubt the lessons would be too popular. As to working with manufacturers, again, it’s a free market and, if scarcities develop, I think you’ll find supplies going to the highest bidder, not the oldest customer.
When food prices rise, grocers make more money. Almost all grocers price most of their inventory by adding percentages to their cost. As the cost rises, the retail prices rise too. The inventory just gets more valuable. And the demand doesn’t decline as quickly as the prices rise.
The worst nightmare in retailing: deflation, not inflation. Look at the shoe store business in the USA. When serious shoe tariffs were mostly eliminated a couple of decades ago, shoe stores went broke. Their retails went down every year, relentlessly, year after year.
Grocers should support any candidates who pledge more ethanol subsidies. Ethanol = food price inflation = higher grocery profits.
More Discussions
Has Same-Day Delivery Become an Expectation Across Retail?
Are expectations around retail delivery speed in flux?OpenAI Names the Infrastructure Standard for Agentic Commerce
Will OpenAI or Google (or another entity) set the gold standard for agentic commerce?Is Five Below Poised For Even Greater Growth?
Five Below is hitting serious growth numbers. Can this trend continue?
The more interesting question is how retailers should prepare for a direct strike by an asteroid, because they already deal successfully with food shortages every day. And, the potential of additional shortages is both expected and a reality. Short deliveries on some perishables are balanced by oversupply on others. “Hey, let’s put beef rounds on sale and then put on a play in the barn!” It’s not a mystery.
Consumers “losing out?” What does that mean, exactly? No pate? Double-digit percentage increases in the price of fresh eggs (happened recently with almost no press coverage)? Or, is it just a catchphrase to describe the entitlement attitudes generated by socialized governments that guarantee cradle-to-grave snugglies? Does it relate to Ryan’s unsubstantiated assertion that there is an impending global food shortage? If there is a food supply hiccup, it will be caused by the idiocy fueling the out-of-line increase in corn cultivation as Ed Dennis pointed out. (For a wonderful primer on this topic, read “The Omnivore’s Dilemma: A Natural History Of Four Meals” by Michael Pollan. Please, read this book. The inexpensive paperback version is now available at Amazon.com.)
In our country we should be more concerned about food consumption than food supply. Obesity is the more pressing problem and stems from overconsumption plus, YES, corn-based products (read the book, just read the book). Having been hospitalized for malnutrition as a child because my parents couldn’t afford food, I’m intimately acquainted with shortages. But today and for the last fifty years of my life food has been plentiful even for poor kids like me. I had to work in restaurants during college for the free meals, but I always ate well enough to both run and swim for my teams.
When you stop seeing obese people on the street or in the workplace, start worrying about the food supply.
This is why the drive to increase ethanol usage makes no sense.
Yes, food–and other–prices will continue to rise as growing world demand exceeds developing supply. That March has begun. The consumer will adjust as best they can as their standard of living changes, either upward or downward, and suppliers will work to create new paradigms to address the new situations.
As to the prophesies of Profs Beddington and Lang, are they professorial or a clear clarion call for a new food policy?
That’s a $64 question and it has currency. At the moment, I’m inclined to avoid prophesy for if you prophesy wrong, policy reactions can be premature or misdirected and nobody will forget it. I suggest retailers keep their eyes open for key emerging matters but meanwhile focus on serving their customers better than anyone else could serve them as the world turns.
Here’s a bit of breaking news, another reason why some farmers may switch out of grain, corn and other food crops in favor of grapes. Let them drink champagne!!!!
There are many issues converging: recession, food safety, changing climate conditions affecting the availability of products. All of those factors affect price and variety of what is or will be available to consumers.
Remembering that consumers will only pay for those things that provide value to them and that that value equation changes by product area and environmental conditions, retailers and manufacturers need to prepare to be MUCH more flexible than they are now. We are likely to see conditions like the low-carb diet craze: certain foods are in demand for limited periods of time.
You need to monitor sales, identify trends, and be able to respond to changes very quickly. If you know what your consumers want and can provide it you will be fine. Whoever does that best will be successful.
Food is cheap and has been cheap for a long time. Perhaps prices are starting to catch up. No one likes to see price increases. Especially when we have been spoiled by low prices for so many years. Nothing really needs to be done. Prices are set my the market of supply and demand. They are what they are. Don’t like high food prices? Then don’t pay them. Grow a garden. Shop at Aldi, Wal-Mart, and the day old bread stores.
In the US, pricing of food is generally not a function of availability, so much as it is a function of the ancillary costs (especially freight) that comprise these products. We are the supermarket to the world, so we have plenty of food to feed our internal needs. Some of our product pricing is reflective of farm supports, others reflect the impact of oil (especially oil hogs-like corn). As the market changes, we are still competing with the rest of the world for our food products, however the higher that the logistic costs remain (i.e. freight and storage), the easier and cheaper it is to purchase these products versus the rest of the world.
Food shortages are not yet apparent in the US. But food has been in short supply in the undeveloped world for decades. We see pictures of starving children in Africa and Malaysia all the time. Food shortages are typically due to uncertain weather (not enough rain, too much rain, etc.) or poor land management or WAR. Conflict does more to interrupt the food supply than anything except weather.
HOWEVER, we are now seeing for the first time how the misguided efforts of a small minority can disrupt food supply. Our nation has jumped upon corn as a renewable source of gasohol which has resulted in increases in most farm products as farmers switch from other grain production to the production of corn to supply the demand for the production of a fuel that actually cost more energy to make than is produced.
Several alternatives exist to this madness. The conversion of part of our automobile fleet to diesel would be a great start and boost efficiency about 25% per vehicle converted but none of our car makers has even offered us the option of buying a diesel powered car. Practically every car maker in Europe offers diesel options and diesel has become the preferred power source in Europe. Our inability to address our energy needs in a rational manner has resulted in increased cost of grain, feed and transportation, and has lowered the standard of living of most Americans. We still have a good reliable supply of food and that is what separates us from the third world but we will be our own undoing until this problem is met head on. Solutions are available now but a vocal minority is blocking our political will to tap current energy reserves, explore for new energy sources off our cost, construct new more efficient refineries and avoid wasteful expenditures of resources on inefficient methods of energy production.
There’s a small bit of U.S. and Euro-centric bias embedded in this question. What makes us think that in a global, free market with growing demand from China, India, Russia and other nations that U.S. retailers will have a lot of choice in these matters?
Is the issue really one of anticipated food shortages or shortages of low-cost processed foods? During the Great Depression, for example, annual U.S. per capita consumption of cabbage was roughly three times higher than it is today–presumably because (then) cabbage was cheap, plentiful and offered high nutritional value and (today) people would rather eat food that is more convenient and, while possibly less nutritious, tastes “better.” Really hungry people don’t examine a calorie’s pedigree too long, they eat what’s available.
Agricultural technology has advanced to the point that we can now predictably raise more food on less land and using fewer resources, but the “anti GMO” lobbies across the world bristle at the first suggestions of a biotechnological solution to world hunger. As a species we simply can’t continue to reject solutions out of hand because they don’t seem to align to our politics while we continue to complain about the problem.
So, let’s talk about the issue as it is. We want to have our cake and eat it too along with our neighbor’s cakes and pies. There are roughly six billion people on earth today. Our current model doesn’t allow us to feed all of them. In less than 50 years there will be nine billion people on earth. This isn’t a problem associated with a temporary hike in oil prices.
Over time the issue is going to be accessing food…period…not how much a Twinkee costs.
In terms of the direct question, retailers COULD begin teaching consumers how to live better with, and on, less but I doubt the lessons would be too popular. As to working with manufacturers, again, it’s a free market and, if scarcities develop, I think you’ll find supplies going to the highest bidder, not the oldest customer.
When food prices rise, grocers make more money. Almost all grocers price most of their inventory by adding percentages to their cost. As the cost rises, the retail prices rise too. The inventory just gets more valuable. And the demand doesn’t decline as quickly as the prices rise.
The worst nightmare in retailing: deflation, not inflation. Look at the shoe store business in the USA. When serious shoe tariffs were mostly eliminated a couple of decades ago, shoe stores went broke. Their retails went down every year, relentlessly, year after year.
Grocers should support any candidates who pledge more ethanol subsidies. Ethanol = food price inflation = higher grocery profits.