Commodity Trading on the International Market-The tomatoes of Anse Royale |22 August 2008

Security here is about food, which is a basic need, without which we cannot survive.

Satisfaction comes from the proof that our farming community is producing more.

At Victoria’s Selwyn Clarke market on Saturday August 16, there were pickup-loads of locally grown tomatoes and leafy vegetables such as Chinese cabbage (bred).
Prices were lower than weeks before.

Tomatoes were very cheap. There was no weighing. For R5 or R10, the buyer got a plastic-bag full of tomatoes. It was estimated that the tomatoes were 10 times cheaper than those Docklands supermarket was selling. A kilo of imported tomatoes at Docklands costs R55.

Abundant supplies of tomatoes at this time of the year traditionally confirm that the good growing season is here. It is the southeast monsoon, the drier and cooler part of the year that is good for growing vegetables.

A lot of the tomatoes come from the farms in the Anse Royale plateau, and the big farmers there decided this year to increase production.

And there are reports that the Praslin farmers, too, are going back to large-scale production of tomatoes.

The other crop expected to do well this year is cabbage. According to agricultural extension officers, the market will soon be flooded with cabbage when farms begin harvesting the crop.

Seychelles’ agriculture has huge potential. We are yet to satisfy the demand for other produce, such as bananas and root crops – recommended for healthy diet, for the hotel industry, ship chandlers and to supply the expanding snack market – and there is a lot of money to be made there by our farmers.

The oil v/s food prices debate in the world

As oil prices go down so will food, right? No

As prices of crude oil and other commodities ease, Americans have had a small dose of relief at the petrol pump. But don’t expect less pain at the grocery counter, says a 21/08/08 report on www.msn.com.

Food inflation is here to stay – and will probably get worse for some things, the report states.

That’s because retail prices for cereal, eggs, cheese and meat generally lag by several months or longer behind world prices for wheat, corn and soybeans – the raw ingredients of so much food. Some food items may come down modestly as commodity prices cool off; others might not budge a cent and some may actually increase, says the report from the United States.

“Food prices tend to go up pretty quickly and they tend to stick on the way down,” said Jim Sartwelle, an economist with the American Farm Bureau, which tracks retail food prices on a quarterly basis.

That’s bad news for consumers worldwide still struggling with high costs for fuel and household goods, and worse for people in impoverished countries.

In the US, retail food prices have jumped on average 6% this year – triple the normal inflation rate of around 2% – as soaring demand for grains coupled with severe weather around the globe battered crops and sent world prices for rice, flour and other staples soaring.

Food manufacturers have dealt with the higher input costs in a variety of ways, from raising retail prices to shrinking boxes of cereal and bags of potato crisps so they can sell less product for the same price.

But while easing prices for crude and other commodities have allowed retail petrol prices in the US to come down almost 10% from July highs, food prices have been more stubborn.

The economics of the food business are partly to blame. Though crude oil is the main ingredient of petrol, processed foods like cereal, crackers or biscuits use only a small amount of corn, wheat and other grains, limiting manufacturers’ pricing power.

“Basically, there’s only a few cents worth of corn in a box of corn flakes, so food prices are much slower to react to the downside than energy prices,” said Richard Feltes, senior vice-president and director of commodity research for MF Global in Chicago.

Another factor is keeping food prices high: though commodity prices have fallen from record levels, they’re still well above historical levels. Corn and soybeans have dropped 24% and 17% respectively in the last two months but are still about double where they were two years ago.

“As long as we’re in this world of expensive oil and commodities, the prices that you’re seeing now on the grocery shelves are not going away,” said Ephraim Leibtag, an economist with the US Department of Agriculture, who tracks retail food prices.

It’s a similar story in poor countries around the globe. While the price of rice – a staple consumed by half the world’s population – has fallen 32% from record levels reached in April, the savings there and for other foods have yet to come down to last year’s levels.

In Ethiopia, for example, food prices at local markets are still three times higher than last year, said World Food Programme spokeswoman Brenda Barton.

“We can’t even buy there,” said Ms Barton, who added that rising food and energy costs have almost doubled the Rome-based WFP’s annual budget to feed hungry people, from $3.1 billion to $6 billion.

“It means (food inflation) isn’t a temporary problem. It’s not going away,” she said.

Looking ahead to next year, economists see a mixed bag for American consumers. While falling grain prices should slow the rate of increases for baked goods, people can expect to pay more for other items like beef, pork and chicken because expensive animal feed battered beef, pork and poultry producers.
 
Crude oil prices

As at August 21 2008

Nymex Crude Future     $116.36 a barrel

Dated Brent Spot           $113.28 a barrel