The drought in the U.S. Midwest will stall or at least slow the long-term trend toward higher protein diets in Asia, the Middle East and North Africa, according to a report from Rabobank.
Skyrocketing agricultural commodity prices are causing the world to re-enter a period of “agflation,” with food prices forecast to reach record highs in 2013 and to continue to rise well into the third quarter of next year. Unlike the staple grain shortage of 2008 that mainly affected rice, this year’s scarcity will affect feed grain crops, with serious repercussions for the animal protein and dairy industries.
“The impact on the poorest consumers should be reduced this time around, as purchasers are able to switch consumption from animal protein back toward staple grains like rice and wheat,” according to Luke Chandler, global head of Agri Commodity Markets Research at Rabobank. “These commodities are currently 30 percent cheaper than their 2008 peaks.”
The “mass liquidation” of animals by farmers seeking to avoid paying high feed grain prices — which Rabobank said will speed up in the beginning of 2013 — will contribute to food prices hitting new highs. Pork prices are expected to be 31 percent higher by the end of June 2013, and beef prices are expected to climb 8 percent.
Rabobank estimates the Food and Agricultural Organization Food Price Index will rise by 15 percent by the end of June 2013.
Chandler says that means the trend by members of the emerging middle class in developing nations to add more meat, poultry and seafood to their diets will stall.