Food Duckspeakers

DUCKSPEAKING FOOD FIGURERS

Notice in the following article how the economic analysts from the Bank of America etc - (duckspeakers from the Ministry of Plenty) - downplay the destruction of farmland and crops in terms of loss of food to eat and focus mainly on monetary issues. They quack-quack-quackingly assure people that although the price of food will go up due to rain and floods this summer it was already high due to drought last winter and so people won't notice the rise as much. They further assure that although there will be a shortage of homegrown UK food to eat it can easily be replaced by importing food (from where?). In other words, lack of food sufficiency (bottom line) is no big deal, or - to use their words - "In the wider scheme of things, it's not too significant.". ~ Jackie Jura

High cost of UK floods unlikely to hit wider economy
FX Street, July 25 2007

LONDON (Thomson Financial) - The cost of recovery from the worst flooding that the UK has seen in 60 years is unlikely to impact the wider economy significantly, despite estimates that damages could run into billions of pounds.

Torrential rain last weekend led to floods in Western England that resulted in the loss of water supplies and electricity for thousands of people, submerged crop fields, and badly affected businesses and the transport infrastructure.

With more rain due to arrive tomorrow, further floods are forecast to come within the next 48 hours, with the Environment Agency saying that Gloucestershire and Worcestershire, which are only just starting to recover from the weekend's deluge, as well as Oxford and Reading are at severe risk of flooding.

However, despite claims by rating agency Fitch yesterday that the cost of this summer's floods to insurers could exceed 3 bln stg, most analysts believe that the effect on the wider economy will be fairly negligible. "In the wider scheme of things, it's not too significant," Gavin Redknap, economist at Standard Chartered, said of the estimate. Howard Archer at Global Insight predicts that the total loss of production and sales is likely to shave no more than 0.1 percentage point off overall GDP growth in the third quarter. "Some of the loss of retail sales and tourism in the affected regions will be compensated for by shoppers and tourists going to other areas," he added.

While agriculture was badly hit by the floods, analysts said the sector's contribution to the British economy is minuscule. The agriculture sector, which had already seen masses of crops submerged by flood water earlier this month, particularly in Lincolnshire, Nottinghamshire and South and West Yorkshire, has now seen havoc wreaked elsewhere, which will likely lead to a shortage of British vegetables on supermarket shelves through next year and bump up food prices.

The National Farmers' Union said Monday that all farming sectors have been affected by the recent floods and rainfall, with further damage seen this weekend to crops and grass across a huge swathe of western, central and southern England. Losses for some farmers and growers in the West Midlands are expected to run into the tens of thousands of pounds.

Standard Chartered's Redknap said crop damage as a result of the floods "could probably add one or two tenths of a percentage point on to food price inflation, and that's obviously going to have implications for the (Bank of England's) monetary policy. It will hit growth, but we're talking about minuscule figures."

Bank of America economist Matthew Sharratt agreed, saying that while food prices may rise, inflation is unlikely to pick up again. "Given the widespread flooding on agricultural land, we are likely to see a spike up in seasonal food prices," said Sharratt. "But this is likely to lead to a slower decline in inflation to the BoE's (2.0 pct) target, rather than a reacceleration," because last year has a strong comparable base when droughts pushed food prices up, he said.

Analysts said the shortage of British food can also very easily be offset by imports, allaying the likelihood of food price inflation further. "The ability of suppliers to import foodstuffs will mean that the ultimate impact on inflation will probably be much smaller," said Paul Dales, UK economist at Capital Economics.

Other analysts said the flood problems were too localised to have much of an effect on the rest of the UK, and has been more subdued because it happened over the weekend.

Jonathon Said at the Centre for Economics and Business Research noted that there was major disruption to transport, but "most people still managed to get to work either side of the weekend." Some parts of the UK's transport infrastructure are still suffering in the flood afflicted areas, with National Express Group's Central Trains, Virgin, and FirstGroup's First Great Western forced to close segments of their train lines until at least tomorrow.

The high street is expected to have suffered too in the area, but analysts believe this to be a short-term problem. The retail high street may have seen less in revenues, but these can be regained" as shoppers will just delay their trips to another time, according to Said.

And other sectors could stand to gain as efforts are made to rebuild or refurbish homes and businesses that were hit by the floods. "We should see a bit more expenditure on redoing houses, for instance DIY and gardening, which should pan out throughout the summer," said Said.

Jackie Jura
~ an independent researcher monitoring local, national and international events ~
website: www.orwelltoday.com & email: orwelltoday@orwelltoday.com

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