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Client Update - 10th May 2024

We have written for some time now about how falling inflation is being closely monitored by central banks who are desperate to start cutting interest rates before the economy sours. Key inflationary forces are therefore always under scrutiny.

 

So far, 2024 is shaping up to be a challenging year for farmers worldwide and this could put pressure on food prices once more. In an update sent out last month we highlighted how extreme weather has led to a surge in chocolate prices due to its impact on cocoa production in North Africa. Similarly, the UK is now bracing for potential disruptions in harvests. According to a report by The Guardian, England experienced its wettest 18-month period on record between October 2022 and March 2024, with 1,695.9mm of rainfall. This has resulted in widespread flooding and waterlogged soils that hinder planting and fertilization efforts.

 

The Energy and Climate Intelligence Unit (ECIU) has released an analysis estimating that the production of key crops like wheat, barley, oats, and oilseed rape could fall by 4 million tons from last year, marking a 17.5% decrease. This is bad news for both farmers, facing a financial hit, as well as consumers, with this anticipated shortfall likely to inflate costs, as imports may be necessary to meet demand, potentially driving up the prices of staple goods such as bread, beer, and biscuits. An unwelcome event as inflation was just beginning to appear under control.

 

In the UK and Europe farmers face another challenge with the emergence of a new strain of the Bluetongue virus, known as BTV-3. The virus emerged in the Netherlands in September 2023 and was detected in the UK two months later, with sadly 126 cases so far having been reported across Kent, Norfolk, Suffolk, and Surrey. Bluetongue is spread through bites from midges, and while there is no evidence bluetongue is currently circulating in midges in Britain, the Government has warned that there is a very high probability it will be more widely spread in the coming months as midges are blown across the channel from affected regions in Europe.

 

In Netherlands and Belgium where the outbreak is the worst a new vaccine has been approved for emergency use from the start of May. In the UK however, there is currently no approved vaccine to combat the new strain, but in a statement regarding the issue Biosecurity Minister Lord Douglas Miller commented that the government is actively engaging with vaccine manufacturers on the development of a vaccine for use in the UK. However, farmers are not optimistic that this will be ready ahead of the warmer months which bring heightened activity of biting midges.

 

Thankfully, the virus does not affect humans or pose a food safety risk, but it can have drastic effects on farmers and reduce food supply with reports by the BBC suggesting that the virus can see around 30% of a sheep herd lost and although there is a lower mortality rate among cattle, it is known to drastically reduce milk yields.  

 

As we approach the summer months, it is good to reflect on the resilience and adaptability of our farming communities. Efforts are already underway to mitigate these challenges through advanced agricultural techniques and proactive disease management strategies.


Do have a good weekend.

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