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Warnings grow over the future of food prices

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Warnings grow over the future of food prices


For the vast majority of the world’s population eating is not a problem. But for some, around 15 percent, it is a daily struggle. And it gets worse during periods of high food prices. Commodities, staple food, have been soaring in value for months; the UN Food Price Index is at an all-time high. Experts are sounding the alarm.
According to the Food and Agriculture Organisation, these prices are likely to remain high and volatile throughout 2012 and beyond.
It is a difficult situation that affects everyone from America to Asia, through Europe and Africa but, almost inevitably, those worst affected are the poorest. In affluent countries where people spend just a small percentage of their income on food, the price rises have not gone unnoticed but are not a cause for panic. However the world’s poorer populations, which can spend more than half their household income on putting food on the table, are feeling the pinch much more acutely.
Naturally weather plays a crucial role – too much rain at times, not enough at others, makes production uncertain.
Earlier this year severe drought in China, the world’s largest producer of corn, caused the price of cereals to rocket. There is also a lack of transparency of food stocks and agricultural production.
In 2008 the surge in prices led to riots in some African countries. In the last year alone, the price of grain has risen by 71 percent.
The world food import bill this year will also break records: 1,290 billion dollars - an increase of 21 percent on last year.
The countries most dependent on imports will be worst affected. They will pay up to 30 percent more for their food imports.
Inevitably many of those countries are in Africa, where some nations spend up to a fifth of GDP on food imports.
Malnutrition is becoming a problem in emerging countries like India and Indonesia, where demand is increasing, and will continue to do so in the future. Soaring demand contributes significantly to rising prices. Part of the problem is population growth: there are tens of millions more people to feed every year. But that is exacerbated by the fact that, in countries like India and China, as more people climb into the middle classes, they expect more middle class meals.
In short, not only are there more people to feed, those people also want to eat more.
So speculation is not the only factor responsible for volatile food prices. The practice of converting foodstuffs into biofuel, falling water tables and global warming are also in the mix.
G20 countries now plan to address the issue by monitoring the global supply of grain. France would like to see tough rules introduced to combat speculation.
2011 may not have seen riots like those of three years ago, but the revolutions in Tunisia and Egypt were partly about the rising price of bread. The prospect of the world being just one severe drought away from a food catastrophe is not that distant.

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