We are NOT running out of food.

Market insights | 29th March 2022 | By Andrew Whitelaw

The Snapshot

  • Many are concerned that Australia faces a food security crisis.
  • Even in a drought year, we produce enough calories to support our population for an extended period.
  • Like most of the developed world, Australians spend a small percentage of expenditure on food.
  • Inflation is a huge issue facing us all, and there will be demand destruction.
  • Demand destruction for us will likely be consumer trinkets, not food (for most).
  • The poorest in the world and in our society are more likely to suffer from personal food insecurity, but not Australia as a nation.
  • Bread prices do increase when wheat prices rise but are only a small percentage (10-15%) of the overall cost of bread in Australia.

The Detail

Everyone is talking about food at the moment. We speak to a lot of journalists, mainly in the rural sector; in recent weeks, the increasing food inflation around the world has got metro journalists interested.

“Is it true that we will run out of bread?”, “Do we face a food security issue?” or “ Should people be stocking up on food before it is unaffordable?”

Firstly, Australia is a huge producer of food. We are a huge nation with a very small population compared to our landmass. Therefore we can produce enough to have a strong exportable surplus.

The two charts below show how much we produced in 2021 per capita as a nation. Australia produces more than enough in one year to provide ample volumes of calories for multiple years; even in a drought year, Australia would be self-sufficient in grains.

On another side note, like most of the developed world, Australia spends very little on food as a percentage of our income. We are a wealthy nation with many other trinkets that we spend our hard-earned on. We really do live in one of the lucky countries.

Inflation is an issue and will see demand destruction in Australia. We may spend less on luxuries, but the effect of inflation is harder felt in the poorest in our society and around the world. The poorest of the world will reduce demand by eating less, as they have a larger percentage of their income spent on food.

Please read our article Hunger Grains for more info on the impact of higher grain prices on developing nations.

If the price of food increases in Australia, the majority will have the ability to pay for the increased costs; this is especially the case with staples.

If we look at the price of bread over time vs grain (see What’s that got to do with the price of bread?), we see that bread prices do tend to increase at a stronger rate in Australia at times of higher wheat pricing. Interestingly, there are very few periods when bread prices fall.

The reality is that wheat is only a small component of the overall bread price (10-15%), and as mentioned previously, our wheat price in Australia hasn’t felt the flow-on effect as strongly as overseas. So wheat driving bread prices hugely higher in Australia is a fallacy at present.

So back to the summary, we have more than enough food to feed our people. There will be times when certain products become unavailable, such as due to floods, etc. But, overall, we may have less choice, but we have enough.

It is important to note again that some of our poorest in society will struggle, but that isn’t a national food security issue but an individual issue. For those with the ability and concerns about our fellow countrymen and women struggling, you can always donate to foodbank.

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Tags

  • Food Security