Prices to rise as 'era of cheap food is over'

UK - The price of a loaf of bread is likely to rise 5p as a result of spiralling wheat prices, a leading firm of agricultural accountants has said.
calendar icon 13 July 2007
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Grain being used to produce biofuels is having an effect on prices

The price of milk, poultry and pork is also expected to rise as a result of an increase in the cost of livestock feed, according to Deloitte.

Wheat and maize prices are now at the highest level in more than a decade. Arable farmers are now making £130 a ton for their wheat, up from £80 last year, and the trend in prices is up.

Mark Hill, food and agriculture partner at the firm, warned that rising demand for wheat and maize was bound to result in increases in the price of staple foods for British consumers.

Mr Hill said the era of cheap subsidised food, which had lasted since the war, was over. He added: "I think we are going to see sustained price inflation - a general upward trend for staple foods such as grains, milk and meat.

"The reason is a very finely balance between supply and consumption. The International Grains Council is predicting wheat production this year at 623 million tons and consumption at 622 million tons."

He said that an increasing trend of turning wheat and corn into alternative fuels, had come at a time when grain stocks had been run down. Grain supplies were already under pressure as a result of bad weather which reduced harvests and pushed up prices last year.

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