There are a number of factors which are likely to increase food production costs but these will not in many cases, be balanced by an increase in food prices. This was the message that Richard Wright, BBC Agriculture Correspondent and Brussels commentator, outlined when he spoke at a recent lunch meeting of the NI Grain Trade Association.

Richard pointed out that it is four years since the Fischer reform of the CAP. This is set to last until 2013 but a health check next year will focus on full decoupling; ending set aside, a flat rate modulation payment and a big switch to rural development.

Commenting on the factors which will impact on production costs Richard noted the reluctance of the EU to take account of science and allow itself to be backed into a corner by the green and environmental lobby. For example the EU seems to take endless time to approve current new GM varieties of US corn and this could mean particular problems for NI farmers as corn gluten and distillers are necessary ration ingredients here. Their unavailability could mean hot competition for alternative ingredients and drive up the price of animal feed. Meantime other countries are marching on with approvals. Making decisions without a scientific basis could give the EU a problem with WTO.

The passion for biofuels is driving up commodity prices. The objectives set by EU and the US on biofuels are impossible as the amount of land required will not be available. Meantime it is driving up land prices and reducing food supplies when the world population is growing.

The Nitrates problem is not going to go away and the industry desperately needs to find a solution. The problem here is phosphates but the Commission does not have a phosphates policy. The policy on nitrates and other environmental issues is likely to get tougher.

There could be a role for agriculture in climate change and the consumer could see agriculture as part of the green solution which would be quite a positive image for the industry.

While Richard was fairly positive about the dairy sector where successive years of drought in the Southern Hemisphere had increased demand he did agree that beef has a problem. While there is a shortage of beef in the EU there is no world shortage and given the dominance of Brazil there never will be. EU will not take action against Brazil as there are no votes gained by creating shortages and driving up food prices. Niche markets and emphasis on quality will help but the UK retailers have the hold on the market and know that farmers have vast amounts of beef to sell each week. The challenge facing the task force set up by LMC is enormous and everyone awaits the outcome with interest. The poultry market is similar in that import competition is a fact of life and the Commission will be slow to do anything about it.

Distance helps in that any aspects that are below the European standard of hygiene and animal welfare are out of sight and therefore out of mind. High standards at home make people feel good - they want high quality products but buying cheap food from faraway places makes them feel even better.