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Fears over the future of food prices

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Fears over the future of food prices
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For the vast majority of the world’s population eating is not a problem. But for some, around 15%, it is a daily struggle. And it gets worse during periods of high food prices. Commodities, from which basic food is made, have been soaring in value for months, and experts are sounding the alarm.

According to 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, of course, those worst affected are the poorest.

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%.

The world food import bill this year will also break records: 1290 billion dollars – an increase of 21% since last year.

The countries most dependent on imports will be worst affected. They will pay up to 30% more for their food imports.

Inevitably many of those countries are in Africa, where some nations spend upto 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.

So speculation is not the only factor responsible for volatile food prices.

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 3 years ago, but the revolutions in Tunisia and Egypt were partly about the rising price of bread.