As international food prices reach near record highs, Malta is set to face the full force of the rise because stocks are highly dependent on imports.
By the end of last year, the UN Food and Agriculture Organisation’s price index had reached highs close to June 2008 levels and echoes of the riots that broke out then are reverberating as Algerians have already taken to the streets.
According to Steve Cachia, an agricultural commodities analyst based in Malta and Brazil, “we’re probably not at the peak yet”.
“The food situation was worsened when there was a drought in Russia and the neighbouring countries. But, at the time, there was hope the US would have an increased crop but even they had climate-related problems,” Mr Cachia explained.
“Now, it’s South America’s time to produce, however, they are also facing problems. Argentina is going through one of its biggest droughts. Production is going down as demand is rising.”
Even though the South American country had rain in recent days, it still remains to be seen whether there would be any losses. “As such, the harvest losses should not keep rising if rain keeps falling but the risk is still there because the rain was good but not enough, just about to hold on further losses,” Mr Cachia said.
However, prices might take a while to fall because “unless we have an indication that production will substantially increase in 2011 it’s difficult for prices to go down,” the analyst said.
“It is my opinion prices will keep rising as the demand is very strong, especially from China,” Mr Cachia said.
While the situation in Malta is not as dramatic, the pinch is already being felt.
“Malta imports a lot of maize and barley for its livestock, prices for which are very high,” said Justin Zahra, from the Ministry of Resources and Rural Affairs. This, he added, was set to directly affect meat, milk and poultry production as had already happened with the price of milk.
In the meantime, producers struggle to keep prices down, to remain competitive, even if their costs are rising.
Ray Briffa, president of the Bakers’ Cooperative, said the situation was tricky for the industry, which was facing rising costs all round.
“In mid-January, we had confirmation the price of a sack of flour rose by €1 abroad but we still haven’t decided what to do about the price of bread.
“Bakers are being cautious on raising their prices as there’s competition both locally and from the international market. So far, we have not taken a stand,” Mr Briffa said, adding individual bakers could go ahead and raise prices to recover costs.
A spokesman for the Pig Breeders’ Cooperative said the cooperative was having talks with the Rural Affairs Ministry on the price of fodder. “But members are reluctant to raise prices, especially because we have so much competition from abroad,” the spokesman said.