Aglobal surge in the price of grain and other agricultural commodities is part of a long-term trend being driven by rising consumption in China and other emerging economies, PotashCorp’s chief executive said Jan. 27.
“I think you are looking at multiple years here of higher grain prices and higher ag commodity prices around the world,” said CEO Bill Doyle, who heads the world’s largest fertilizer company.
While many are blaming weather-related crop damage for the recent jump, food price inflation is primarily due to the increasing demand from Asia’s fast-growing middle-class, he said in an interview with Reuters.
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“You just have this rekindling of demand,” said Doyle. “We are seeing wealth creation and the same dynamics that were in place before the great recession have been ignited again.”
Higher grain prices have led to rising fertilizer demand, allowing PotashCorp and its peers to raise prices on nitrogen, phosphate and potash products.
Earlier, PotashCorp said its fourth-quarter profit had more than doubled. The company also raised its 2011 earnings and sales forecast.
The United Nations food agency sounded a warning on cost of food earlier this month, saying prices jumped to record highs in December and that some grains could climb even further. The price of corn alone has more than doubled in the last six months, while wheat, soybeans and other crops have also risen sharply.
“We actually need a record crop now, every year, just to keep pace with demand,” said Doyle, who has worked in the fertilizer industry for close to four decades.
