Up to a point, I do get some of the naval gazing taking place at the present time, where input costs are concerned but let’s talk about food inflation.
Surely the real game afoot is that of trying to gauge where farmgate prices will be for milk, beef and lamb six months down the track.
And here comes the good news for Irish agriculture. Food inflation is running at 5% within the UK at the present time. And there is every prospect of this trend being maintained well into the future.
Inflation is a word that hasn’t been used in common parlance for decades. The supermarkets have tried their best to keep this factor out of their pricing strategies for many years, irrespective of the costs being incurred by primary producers.
But it’s only possible to keep the tide back for so long.
What is food inflation?
Inflation means that prices in the shops go up, with the result that retailers must reflect these developments back along the supply chain.
The other encouraging dimension to this story is the trend that consumers now realise that they must pay more for their food. A number of recent surveys carried out in the UK have confirmed this reality.
So let’s say, for argument’s sake, that an inflationary contribution equivalent to 5% of the market price is reflected back along the beef chain for the foreseeable future.
By my calculations, it wouldn’t take that long before Irish finished cattle prices reach €6.00/kg and, possibly more. This is assuming that we are starting from a baseline point of €4.50/kg.
Think I’m wrong? Time will tell.
Future for cheap food
One thing I do know is that the days of cheap food are over. In this (hopefully) post-Covid-19, post-Brexit world, all bets are off in terms of where the world’s commodity markets will end up.
Set against these trends is the need to treat farmers and production agriculture with respect.
So, if fertiliser, feed and fuel prices start to take off, as they are doing at the moment, it is only fair that the price reflected back to the farmer takes account of this reality.
Food used to be treated as a basic commodity. Thankfully, consumers are now seeing it as a vital component of their lives, one that must be valued on a similar basis.
50 years ago, consumers spent the majority of their salaries on food. We may not reach those ‘heady heights’ again.
But the trajectory in terms of consumers committing more of their hard earned money in the direction of food procurement is, very much, going in the right direction.
So does food inflation tick lots of boxes for Irish agriculture? It certainly does in my view.