Food costs at records as U.N. warns of volatile era
selected quotes:
*The United Nations said on Thursday its Food and Agriculture Organization Food Price Index rose for the seventh month in a row to reach 231 in January, topping the peak of 224.1 last seen in June 2008. It is the highest level the index has reached since records began in 1990.
*"These high prices are likely to persist in the months to come," FAO economist and grains expert Abdolreza Abbassian said in a statement.
*"Today's announcement by the Food and Agriculture Organization should ring alarm bells in capitals around the world," said Gawain Kripke, a policy and research director for Oxfam America, an international development group.
*"Governments must avoid repeating the mistakes of the past when countries reacted to spiraling prices by banning exports and hoarding food. This will only make the situation worse and it is the world's poorest people who will pay the price," he said.
*Janis Huebner, economist at Germany's DekaBank said inflation partly fueled by increasing food prices could in turn trigger interest rate rises in several countries this year.
*"This could mean a slowing down of growth in the countries which raise their interest rates," he said. "This could involve Asian countries and other regions, this would somewhat brake growth but I do not expect a hard landing."
STOCK BUILDING
*Some countries, particularly where food prices loom large in household budgets, have been building up food stocks to contain prices -- and to limit the political and social fallout.
*During the last food price crisis, the World Bank estimated that some 870 million people in developing countries were hungry or malnourished. The FAO estimates that number has increased to 925 million.
*"2008 should have been a wake-up call, but I'm not yet sure all the countries in the world that we need to support this have woken up to it," the World Bank's Zoellick said.
*Indonesia, Southeast Asia's biggest economy, last week bought 820,000 tons of rice, lifting rice prices, while suspending import duties on rice, soybeans and wheat.
*Algeria last week bought almost 1 million tons of wheat, bringing its purchases to at least 1.75 million since the start of January, and ordered a speeding up of grain imports.
*On a day of bloody confrontation in Egypt, where protesters are demanding an end to the 30-year rule of Hosni Mubarak, the U.N. World Food Programme's Executive Director Josette Sheeran said the world was now in an era where it had to be very serious about food supply.
*"If people don't have enough to eat they only have three options: they can revolt, they can migrate or they can die. We need a better action plan," she said.
source: http://www.reuters.com/article/2011/02/04/us-food-prices-idUSTRE71223720110204?pageNumber=1 source of charts: http://www.fao.org/worldfoodsituation/wfs-home/en/
Skyrocketing costs caused global rioting and pushed as many as 64 million people into poverty. Economists at the University of Adelaide, recently examined the impact that food prices have on civil conflict in 120 countries in the past 40 years. "Our main finding is that in low-income countries increases in the international food prices lead to a significant deterioration of democratic institutions and a significant increase in the incidence of anti-government demonstrations, riots, and civil conflict," the researchers note. The same finding does not hold true in high-income countries, where citizens can better afford food. Yes more political uncertainty could be expected.
