Volatile grain market threatens national security, warns report

Britain must plan for an era of high grain prices and tight food reserves, warns a national security strategy identifying key threats to the country.

Global grain stocks are at their lowest historical level and increasingly dependent on international shipping, says the government document. Supplies per head of population could run out within 40 days.

Demand for food will rise as a growing global population becomes increasingly urbanised and wealthier, warns the report. At the same time, trends such as climate change will put greater pressure on supplies.

“We must recognise that this will increase the global demand for meat and dairy products, and further increase overall demand for grain. We should therefore plan for continued pressure on grain prices and on food reserves.”

To address the effects on security, the report says the government is undertaking a systematic and detailed region-by-region analysis of how climate change is likely to affect the United Kingdom.

It is also analysing water and food security issues to ensure sustainable and secure supplies; and increasing overall investment in climate change research to at least £100m over the next five years.

The report comes days after London wheat futures prices jumped again following a report from the US Department of Agriculture, which slashed its US maize forecast.

The USDA cut maize yields by a record 13m tonnes, resulting in the tightest stocks for 14 years. American futures reacted by hitting their daily upward limits, dragging wheat and soya values with them.

London wheat futures followed suit, reaching £170/t for November before ending the week at £162.50/t. New-crop markets ended the week at £137.50/t for November 2011.

Freak weather has caused a series of poor harvests around the world, causing prices to surge. A bad drought saw a wheat export ban imposed by Russia, one of the world’s largest exporters.