November 9, 2007
We're not the only ones feeling the effects of inflation.
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In China, soaring food prices have driven inflation to their highest levels in more than a decade, straining household budgets in the world's most populous country. Dramatic price increases have been chalked up to an unfortunate confluence of factors – supply problems endemic in China's pork industry, an outbreak of "blue ear" disease on pig farms and to drought and flood-related price hikes. But behind these events, a host of structural problems are contributing to higher prices.
China feeds 22 per cent of the world's people with only 7 per cent of its farmland and must do so with a poor endowment of agricultural resources. Compounding matters, China's per capita water supply amounts to just a quarter of the global average and is unevenly distributed.
A wealthier generation of Chinese consumers is shifting from traditional meals to a diet heavy in meat, eggs and dairy products. China's urban population – which is growing by 15m-20m people a year – consumes three times more meat than the rural population. |
– Jing Ulrich
Financial Times
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And adding to their inflation problems, they're about to be hit again.
Soybeans in Chicago rose after Argentina, the world's third-biggest supplier of the oilseed, increased taxes on exports of the commodity and other crops to boost government revenue and increase domestic supplies.
Taxes on soybeans, the nation's biggest export crop, rose to 35 percent immediately from 27.5 percent, Economy Minister Miguel Peirano said yesterday in Buenos Aires. The levy on corn rose to 25 percent from 20 percent, and wheat is taxed at 28 percent, from 20 percent previously.
Soybeans for January delivery jumped as much as 6.50 cents, or 0.6 percent, to $10.45 a bushel in after-hours trading on the Chicago Board of Trade, and traded at $10.425 at 5:30 p.m. Beijing time. The futures reached a three-year intra-day high yesterday as crude oil rose to a record.
Only the U.S. and Brazil export more soybeans. Argentina is also the largest supplier of soybean oil to China, the world's biggest buyer of soybeans and vegetable oil. |
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– Bloomberg |
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