BusinessDay... the voice of business: Be prepared to pay more for food

Be prepared to pay more for food
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KIRK LEIGH on 20 April, 2008 12:00:00
 
Have you been spending ‘too much’ on food recently? Be prepared to spend
more and the problem is not short term. It is not our intention to unsettle you
with this rather gloomy picture of world affairs but to alert you so you can
start planning on how to make up for eroded or about to be eroded income in the
coming months.
But before all the signposting on where to make, save or invest the extra buck
lets look more at the north bound food prices.
There are fears that rising food prices would get out of hand, reason why
government recently released grains from the strategic reserve. But that move
would do little to stem the rise. This is because the country has a huge food
import bill amounting to $300 billion annually.
The trend now is that countries who export food to Nigeria and elsewhere are
now less willing to sell their food because they are also facing a similar
problem. They would rather keep the food to feed their population. In fact it is
in the news that in some countries, people take to the streets in protest. Our
government’s move to narrow the budget deficit and raise the monetary policy
rate-to reduce inflation-would scarcely address the coming surge.
There are even more remote reasons why you would pay more for your groceries;
it is a global phenomenon. From the Americas to Zimbabwe consumers complain that
their incomes are being eroded by heavy shelf bills.
Much of the world’s food crop are no longer consumed for food but go into
producing energy to power the engines in the developed world, an alternative
source of fuel called  bio-fuels. Sadly, African countries are shooting
themselves in the foot by producing to service this market for bio-fuels while
hordes on the continent face starvation. What is happening to all the cassava
being produced in Nigeria ? Hazard a guess and you would be right. There is even
talk of Nigeria directly producing bio-fuels right here in the country. Do we
have to pay the price when we go shopping?
Another reason for rising prices is that the harvest has been bad in the last
couple of years. That partly informs why government tampered with reserves. 
Poor harvests are because of global warming or what is called climate change.
There are changing patterns in rain fall and sunshine. This phenomenon, which
determines when farmers plant and nurture their crops, can no longer be relied
on. The net effect of this unpredictability is that we would continue to see
more food shortage and therefore, higher prices.
Higher prices mean lower disposable income for you. It now depends on you
whether you want to remain on the same income bracket or you want to raise your
earning power to match the rise in prices and still have enough to save and or
invest.
That is the subject this page on personal finance seeks to address. We are
going on a safari of the Nigerian and indeed the international investment
landscape to sniff out opportunities for saving, investment and even arbitrage
so that in the least you would not be worse-off.
Please keep a date with us every Monday.
Food prices would continue to rise.
You need to make extra money to offset the rise.
There are opportunities to make the extra buck.
This page will show you where Also where to put it to make it grow