EDITORIAL
EDITORIAL
The good, the bad and the ugly...
There is an old cliché about the red revenues. The reality is that we should dependence on oil for energy, are
buses that traverse London every be worried – escalating food prices beginning to lose their lustre as
day: that they usually ‘come in now threaten food security around the answer to the ills of rising oil
Opinions and analysis for the plant science industry Issue 25 – July 2008
three’. There is another less welcome the world and could jeopardise the prices. Being in the spotlight means
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GUIDE 2008
threesome that is heading our way workings of agricultural and other that other issues come to the fore,
or, to be more accurate, has already commodity markets. such as the role of subsidies in the
arrived in some developed countries: production of biofuels. The EU’s trade
agflation, inflation, and stagflation. The global economic infrastructure has commissioner, Peter Mandelson, has
changed considerably since the 1970s launched an investigation into anti-
Stagflation is usually defined by and some argue we are better able to dumping claims of US biodiesel in
a period of slow economic growth withstand economic downturns. But Europe.
and relatively high unemployment, few would argue that a crisis in energy
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accompanied by rising prices, or markets, oil in particular, is capable of In 2007, biofuels provided around
inflation, which in turn means that inducing precarious states of economic 1.3% of world energy supplies, a
purchasing power falls. Agflation flux from which few benefit. It is not tiny portion when compared to oil,
reflects the increase in the price of clear why oil prices are so high. “Good” which for the foreseeable future is
food as a result of increased demand reasons being given are the rising akin to the fourth horseman of the
from human consumption, though the demand from the developing world. Apocalypse.
picture is far more complex than this Others believe that oil production is
with the advent of biofuels. entering a period of decline. The role Nessa Keogh,
of speculators, who aim to make a fast Editor.
Perhaps, the most infamous time that buck by short-selling, is also cited as
these three bedfellows came riding a culprit.
in together, like the horsemen of the
Apocalypse, was in the 1970s when Ultimately, the rise in food prices
world oil prices rose dramatically, has put biofuels back firmly in the
fuelling sharp inflation in developed spotlight but not in the way we would
countries. For these countries, like. Rather, they are being seen as a
including the US, stagnation served major culprit in rising food prices –
to increase the inflationary effects. siphoning off food inputs to support
World oil prices are now at an all-time global biofuel production targets.
high, and are expected to rise higher. Agricultural analysts have different
views as to which factors weigh most
Should we be worried about agflation? in rising food prices, such as higher
After all, rising food prices mean that demand in China to a slowdown in
demand for agricultural commodities farming productivity growth, but there
– such as maize and soybeans is a realisation that demand for maize
– on which the crop protection etc for biofuel production is now
industry thrives, will continue for playing a role in agflation.
the foreseeable future and suppliers
of agricultural inputs, including Biofuels, whose very rationale was
fertilisers, will continue to see higher to serve as a counterweight to our
2 July 2008 • www.agrow.com
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