Monday, September 24, 2007

Surfing on the Wave of Prosperity!

Dairy farmers surf wave of prosperity
But do inflation and imbalances lie in wait?

Oh man, I really thought I had a reason to be optimistic there for a minute.

When Fonterra announced last month its forecast payout of $6.40 a kilogram of milksolids, normally sober economists struggled for adjectives to describe the economic impact.

Sober economists are hard to find these days.

Possibly the biggest positive shock to the economy, said one.

Inflation to the rescue!

The good news, for primary producers at least, is that it is not just a dairy boom.

International grain prices have also ascended into the stratosphere and, though New Zealand is not a grain exporter, the price rises are expected to push up the price of meat.


"We've been looking for this fundamental repricing of agricultural commodities since the early 1970s," he says.

I've already got my disco balls.

"There's always been a feeling that as population grew in developing countries somebody would have to feed them and we knew at some point there would be a bit of a crunch between supply and demand with food."

Credit Crunch meets Captain Crunch! Epic battle! Stay tuned!

"It's the very real consequence of the global pick-up in food price inflation, termed agflation," it said.

Just two more letters on the front of that agflation and my job will be complete.

The last major spike in world food prices was in the early 1970s.

Oh yeah, that's what I wish I wasn't talking about. Oh no, baby.

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