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Record food prices raise global alarm
Prices likely to rise further and could cause unrest, warns UN
By Ben Nadarajan
http://www.straitstimes.com/STI/STIMEDIA/pdf/20110106/070111p1.pdf
GLOBAL food prices have hit an all-time high, raising the spectre of unrest, inflation and famine around the world.
The United Nations Food and Agricultural Organisation's (FAO) food price index for December shot up for the sixth month in a row, ending at its highest since the measure was started 20 years ago.
The price rises have affected a variety of commodities, from wheat and pork to sugar.
The FAO said that though the surge did not yet amount to a crisis, the situation was alarming, and the world now faces a 'food price shock'.
Warning that prices of agricultural commodities are likely to rise further, its senior economist, Mr Abdolreza Abbassian, was quoted in reports as saying: 'The longer (food prices) remain high, the longer there is a possibility of a repeat' of the crisis in 2007-08, when rising prices worldwide led to violent unrest in several countries.
The food price index is an international basket taking into account the export prices of wheat, corn, dairy produce, meat, sugar and oil.
It does not measure domestic prices as these could be affected by many factors, such as subsidies.
Experts contacted by The Straits Times have warned that increasingly volatile weather patterns due to climate change, rapid inflation and an expanding global population could all combine to compound the problem in the new year.
The most worrying rise, they said, is that of wheat, which has almost doubled in price from a year ago, as the world faces an even greater shortage now due to massive floods in Australia.
Wheat production had already been badly affected by a severe drought in Russia last year.
This will affect prices of a wide variety of goods, from cereals to pasta.
The picture is a bit rosier for rice, the main staple of over three billion people in Asia and Africa.
This is because good harvests in countries like China and India have offset massive dips in rice-rich nations like Thailand, Vietnam and Pakistan due to extreme weather, said the FAO.
The warning from the UN body comes as inflation looms as a challenge in both developing and developed nations.
Food inflation in many Asian nations is already in double digits, raising fears that the price pressures could spread more broadly to other sectors and pose a threat to both economic and social stability.
The UN World Food Programme's regional director for Asia, Mr Kenro Oshidari, said that poor people already spend close to 70 per cent of their incomes on feeding their families when food prices are relatively stable.
'So any slight increase in food prices will make them spend virtually their entire income on food, and this will compromise other areas such as their children's health care and education,' he told The Straits Times.
In Singapore, food experts said it was too soon to say whether price hikes were imminent.
President of the Singapore Bakery and Confectionery Trade Association Liow Kian Huat said the Republic's policy of importing from diverse sources has staved off major price hikes so far.
'If one country has floods, we can still get (produce) from another country. But if all major countries are hit by disasters, then we will suffer.'
The experts contacted said climate change could turn this nightmare scenario into a reality.
For example, last year - one of the worst in recent memory in terms of natural disasters - too little or too much rain ruined crops across the world.
In Thailand, the world's largest exporter of rice, for instance, a double whammy of drought and flooding slashed the size of its harvest last year.
'It didn't rain when it needed to rain,' lamented Mr Angsumal Sunalai, director-general of the Thai Meteorological Department.
Meanwhile, governments are already implementing measures to deal with price hikes.
South Korea's Finance Ministry said it would make an effort 'on all fronts' to curb prices; several Chinese cities have implemented direct controls to limit food price increases; while India has released grain from its national stockpile.
In Indonesia, which had to import rice in bulk last year - the first time since 2007 it has done so - the government is trying to wean people off the beloved crop and lure them to other forms of carbohydrate.
The concerns in Indonesia extend beyond rice.
President Susilo Bambang Yudhoyono, whose Cabinet met yesterday to discuss surging food prices, urged people to grow their own chillis as prices rose five-fold in the past year, making them costlier than beef.
'Households should be creative to plant plants,' he said.
[email protected]
Prices likely to rise further and could cause unrest, warns UN
By Ben Nadarajan
http://www.straitstimes.com/STI/STIMEDIA/pdf/20110106/070111p1.pdf
GLOBAL food prices have hit an all-time high, raising the spectre of unrest, inflation and famine around the world.
The United Nations Food and Agricultural Organisation's (FAO) food price index for December shot up for the sixth month in a row, ending at its highest since the measure was started 20 years ago.
The price rises have affected a variety of commodities, from wheat and pork to sugar.
The FAO said that though the surge did not yet amount to a crisis, the situation was alarming, and the world now faces a 'food price shock'.
Warning that prices of agricultural commodities are likely to rise further, its senior economist, Mr Abdolreza Abbassian, was quoted in reports as saying: 'The longer (food prices) remain high, the longer there is a possibility of a repeat' of the crisis in 2007-08, when rising prices worldwide led to violent unrest in several countries.
The food price index is an international basket taking into account the export prices of wheat, corn, dairy produce, meat, sugar and oil.
It does not measure domestic prices as these could be affected by many factors, such as subsidies.
Experts contacted by The Straits Times have warned that increasingly volatile weather patterns due to climate change, rapid inflation and an expanding global population could all combine to compound the problem in the new year.
The most worrying rise, they said, is that of wheat, which has almost doubled in price from a year ago, as the world faces an even greater shortage now due to massive floods in Australia.
Wheat production had already been badly affected by a severe drought in Russia last year.
This will affect prices of a wide variety of goods, from cereals to pasta.
The picture is a bit rosier for rice, the main staple of over three billion people in Asia and Africa.
This is because good harvests in countries like China and India have offset massive dips in rice-rich nations like Thailand, Vietnam and Pakistan due to extreme weather, said the FAO.
The warning from the UN body comes as inflation looms as a challenge in both developing and developed nations.
Food inflation in many Asian nations is already in double digits, raising fears that the price pressures could spread more broadly to other sectors and pose a threat to both economic and social stability.
The UN World Food Programme's regional director for Asia, Mr Kenro Oshidari, said that poor people already spend close to 70 per cent of their incomes on feeding their families when food prices are relatively stable.
'So any slight increase in food prices will make them spend virtually their entire income on food, and this will compromise other areas such as their children's health care and education,' he told The Straits Times.
In Singapore, food experts said it was too soon to say whether price hikes were imminent.
President of the Singapore Bakery and Confectionery Trade Association Liow Kian Huat said the Republic's policy of importing from diverse sources has staved off major price hikes so far.
'If one country has floods, we can still get (produce) from another country. But if all major countries are hit by disasters, then we will suffer.'
The experts contacted said climate change could turn this nightmare scenario into a reality.
For example, last year - one of the worst in recent memory in terms of natural disasters - too little or too much rain ruined crops across the world.
In Thailand, the world's largest exporter of rice, for instance, a double whammy of drought and flooding slashed the size of its harvest last year.
'It didn't rain when it needed to rain,' lamented Mr Angsumal Sunalai, director-general of the Thai Meteorological Department.
Meanwhile, governments are already implementing measures to deal with price hikes.
South Korea's Finance Ministry said it would make an effort 'on all fronts' to curb prices; several Chinese cities have implemented direct controls to limit food price increases; while India has released grain from its national stockpile.
In Indonesia, which had to import rice in bulk last year - the first time since 2007 it has done so - the government is trying to wean people off the beloved crop and lure them to other forms of carbohydrate.
The concerns in Indonesia extend beyond rice.
President Susilo Bambang Yudhoyono, whose Cabinet met yesterday to discuss surging food prices, urged people to grow their own chillis as prices rose five-fold in the past year, making them costlier than beef.
'Households should be creative to plant plants,' he said.
[email protected]
