Comments on: What goes up … http://www.26econ.com/what-goes-up/ Online economics Sun, 12 Oct 2008 19:58:59 +0000 http://wordpress.org/?v=2.3.2 By: Matt Nolan http://www.26econ.com/what-goes-up/#comment-6301 Matt Nolan Mon, 21 Apr 2008 20:33:57 +0000 http://www.26econ.com/what-goes-up/#comment-6301 Hi, Good summary of the facts! There are a couple of things I would add though. There was a drought in Aussie last year, and a drought in NZ this year. Both of these droughts would have put upward pressure on dairy prices. Another extra point I would add is that the cost of production has also risen sharply - a factor that would have driven up prices. I'm not sure if the recent cost increases are a temporary or permanent thing. In the case of fertilizer I expect them to be temporary - I think that drought conditions etc increased the demand for these commodities and once conditions calm down things will be fine. However, I am uncertain as to whether there are also supply reasons for this upswing in price - if there is it may be more concerning. Also on the cost side, most countries use a large quantity of "feed" to get their cows to produce dairy product as they don't have the quantity of good quality grass that NZ does. The price of feed has risen strongly as the price of inputs have increased - as a result of biofuels. As this will lead to some permanent increase in the price of "feed", it should be a good story for New Zealand - increasing our comparative advantage in dairy production Hi,

Good summary of the facts!

There are a couple of things I would add though. There was a drought in Aussie last year, and a drought in NZ this year. Both of these droughts would have put upward pressure on dairy prices.

Another extra point I would add is that the cost of production has also risen sharply - a factor that would have driven up prices.

I’m not sure if the recent cost increases are a temporary or permanent thing. In the case of fertilizer I expect them to be temporary - I think that drought conditions etc increased the demand for these commodities and once conditions calm down things will be fine. However, I am uncertain as to whether there are also supply reasons for this upswing in price - if there is it may be more concerning.

Also on the cost side, most countries use a large quantity of “feed” to get their cows to produce dairy product as they don’t have the quantity of good quality grass that NZ does. The price of feed has risen strongly as the price of inputs have increased - as a result of biofuels.

As this will lead to some permanent increase in the price of “feed”, it should be a good story for New Zealand - increasing our comparative advantage in dairy production

]]> By: aaron http://www.26econ.com/what-goes-up/#comment-6235 aaron Mon, 21 Apr 2008 07:38:23 +0000 http://www.26econ.com/what-goes-up/#comment-6235 Owinok: As far as I know they are nominal prices. Owinok: As far as I know they are nominal prices.

]]> By: Owinok http://www.26econ.com/what-goes-up/#comment-6230 Owinok Mon, 21 Apr 2008 06:35:09 +0000 http://www.26econ.com/what-goes-up/#comment-6230 I am wondering whether the prices on the chart are adjusted for inflation or not. I mention this since a large part of the crisis debate often fails to take account of the difference between nominal and real prices. I am wondering whether the prices on the chart are adjusted for inflation or not. I mention this since a large part of the crisis debate often fails to take account of the difference between nominal and real prices.

]]> By: aaron http://www.26econ.com/what-goes-up/#comment-6228 aaron Mon, 21 Apr 2008 06:25:34 +0000 http://www.26econ.com/what-goes-up/#comment-6228 Owinok: I really know very little about oil so it's hard for me to say. My guess would be that relatively high prices are here to stay, but I wouldn't be surprised if prices fall a little from their current levels due to new oil reserves being exploited. Also synthetic biology technology to produce new types of biofuels looks promising. Owinok: I really know very little about oil so it’s hard for me to say. My guess would be that relatively high prices are here to stay, but I wouldn’t be surprised if prices fall a little from their current levels due to new oil reserves being exploited. Also synthetic biology technology to produce new types of biofuels looks promising.

]]> By: Owinok http://www.26econ.com/what-goes-up/#comment-6226 Owinok Mon, 21 Apr 2008 06:00:25 +0000 http://www.26econ.com/what-goes-up/#comment-6226 Aaron, the commodities debate is back and I would place my bet alongside yours regarding dairy and other farm products like wheat and rice. What's your take of crude petroleum though? Aaron, the commodities debate is back and I would place my bet alongside yours regarding dairy and other farm products like wheat and rice. What’s your take of crude petroleum though?

]]> By: Chewxy http://www.26econ.com/what-goes-up/#comment-6221 Chewxy Mon, 21 Apr 2008 04:22:42 +0000 http://www.26econ.com/what-goes-up/#comment-6221 <blockquote>Cows are milked about 300 days per year with 2 months off for everyone.</blockquote> See why I drink soy milk? Imagine people pinching your tits for 300 days a year... LOL

Cows are milked about 300 days per year with 2 months off for everyone.

See why I drink soy milk? Imagine people pinching your tits for 300 days a year… LOL

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