Following on from our Food For Thought post, SOYMB reads in The Independent that food riots, geopolitical tensions, global inflation and increasing hunger among the planet's poorest people are the likely effects of a new surge in world food prices, which have hit an all-time high according to the United Nations. Global food prices have risen for the sixth month in succession. Wheat has almost doubled since June, sugar is at a 30-year high, and pork is up by a quarter since the beginning of 2010. More is sure to follow.
Food producers have been told to expect the wheat price to jump again this month. Economists warn that "soft commodity" food prices show little sign of stabilising, and that cereals and sugar in particular may surge even higher in coming months. In addition, long-term trends associated with growth in population and climate change may mean higher food costs become a permanent feature of economic life. Speculation, too, may be part of the crisis, as investors climb on to the rising food-price bandwagon. The latest surge in crude oil prices adds to the risk of turmoil. Many experts say oil prices show few signs of abating. Higher oil prices add to food price inflation by increasing transportation costs.
The biggest impact of the food price shock will be felt in countries in the developing world where staple items command a much larger share of household incomes. Poor families already spend about half of their budget on food – they cannot protect themselves. As they go hungry, the adults will protest and, if prices remain high for more than two years, their infants will suffer stunting. Countries that are poor and produce relatively little of their own food are most vulnerable to the food price shock – Bangladesh, Morocco and Nigeria top the "at risk" list, according to research by Nomura economists, who also identify growing shortages of water as a critical factor restraining any growth in agricultural productivity. Some 30 per cent of all water used in agriculture comes from unsustainable sources.
"We are entering danger territory" said the UN Food and Agriculture Organisation's chief economist, Abdolreza Abbassian.
1 comment:
Rising costs for cooking-oil, rice and fish may mean little to the average Goldman Sachs Group Inc. staffer. To a family living on $3 a day and already spending two-thirds of income on food, they are devastating. Rising wealth disparities could foreshadow a year of tensions, as failed harvests and inflation cause famines, riots, hoarding and trade wars worldwide. The bubble here would be one in human suffering.
http://www.bloomberg.com/news/2011-01-05/bubbles-galore-to-make-2011-year-to-remember-commentary-by-william-pesek.html
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