24 March 2011 18:05 [Source: ICIS news]
By Frank Zaworski
Global food prices that touched record highs in February have been cited by the UN and others as a major contributor to the social turmoil and political unrest in North Africa and the ?xml:namespace>
Rising food prices have driven an estimated 44m people into poverty in developing countries since last June, the World Bank Group said ahead of the March G20 meeting of finance ministers and central bank governors in
A steady rise in food prices was ignited in mid-2010 by dry weather in the key wheat-growing areas of eastern Europe and
In the second half of 2010, prices of wheat and corn climbed by more than 70%, and prices for rice and oilseeds followed suit, according to data from the UN's Food and Agriculture Organization (FAO).
The World Bank said its food price index increased by 17% between August and November last year, just 11% below what it was during the peak of the global food price crisis in June 2008.
In addition to rising grain and oilseed prices, sugar is at a 30-year high because of poor harvests in
In the food-rich US, the Labor Department said food prices rose 3.9% in February, the biggest gain in 37 years. The increase was largely blamed on a 50% increase in the cost of vegetables.
Elevated food prices are most harmful to poor countries such as
In many countries, consumers are insulated from the rise in global food prices through government subsidies on basic staples such as wheat, the World Bank said in a recent report.
A 50% increase in the wheat price would translate into an estimated increase in the import bill of nearly 1% of Yemeni GDP, or more than 20% of its foreign reserves, the World Bank said.
On 8 March, however, the FAO said that it was rising crude oil prices that are driving up food costs globally.
"Unexpected oil price spikes could further exacerbate an already precarious situation in food markets," said FAO director of trade and markets David Hallam.
"The last time we saw food price inflation like we are seeing today, oil was peaking at $147/bbl," said Bliss Baker of the Global Renewable Fuels Alliance.
However, there is more behind the rapid rise in food prices than grains being used for biofuels and bad weather. The remarkable surge in
While bigger and better crops in 2011 will improve global food stocks, the FAO said it expects to see more food price volatility ahead as oil prices react to geopolitical events.
International commodity prices are anticipated to average higher in the next decade, compared with the decade before the price spike of 2007–2008, the FAO said in a March Agricultural Outlook developed in conjunction with the OECD.
Their forecast is based, above all, on the resumption of economic growth in developing countries, higher demand for grains from rising biofuels production, and anticipated higher costs of energy-related farming inputs, the FAO and OECD said.
“Agriculture markets have always been volatile, but if governments act together then extreme price swings can be mitigated, and vulnerable consumers and producers better protected," said OECD Secretary-General Angel Gurría.
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