Eritrea News by Biddho.com - Rising To The Challenges!

Home

Food prices soar...

Written by Administrator
Friday, 04 April 2008
If your grocery bill is going up, you're not alone. From subsistence farmers to gourmets, consumers worldwide face rising food prices in what analysts call a perfect storm of conditions. Freak weather is a factor. But so are dramatic changes in the global economy - higher oil prices, lower food reserves and growing consumer demand in China and India. The world's poorest nations still harbour the greatest hunger risk. Clashes over bread in Egypt killed at least two people last week, and similar food riots broke out in Burkina Faso and Cameroon this month. But food protests now crop up even in Italy. "It's not likely that prices will go back to as low as we're used to," said Abdolreza Abbassian, secretary of the Intergovernmental Group for Grains for the UN Food and Agriculture Organisation (FAO). "In Haiti, unless the government is subsidising consumers, consumers have no choice but to cut consumption. It's a very brutal scenario." No one knows that better than Eugene Thermilon, 30, a Haitian labourer who can no longer afford pasta to feed his wife and four children since the price doubled to the local equivalent of R4.,58 a bag. Their only meal on a recent day was two cans of corn grits. By noon the next day, he still had nothing to feed them for dinner. In the long term, prices are expected to stabilise. Farmers will grow more grain for fuel and food and eventually bring prices down. Already this is happening with wheat, with more crops to be planted in the US, Canada and Europe in the coming year. However, consumers still face at least 10 years of more expensive food, according to preliminary FAO projections. Among the driving forces are petrol prices, which increase the cost of everything from fertilisers to transport to food processing. Rising demand for meat and dairy products in rapidly developing countries such as China and India is sending up the cost of grain, used for cattle feed, as is the demand for raw materials to make biofuels. What's rare is that the spikes are hitting all major foods in most countries at once. Food prices rose 4 percent in the US last year, the highest rise since 1990, and are expected to climb again this year. As of December, 37 countries faced food crises, and 20 had imposed food-price controls. For many, it's a disaster. The UN's World Food Programme says it is facing a $500-million (R4-billion) shortfall in funding this year to feed 89 million needy people. Subsidies In Egypt, where bread is up 35 percent and cooking oil 26 percent, the government recently proposed ending food subsidies and replacing them with cash payouts to the needy. But the plan was put on hold after it sparked public uproar. "A revolution of the hungry is in the offing," said Mohammed el-Askalani of Citizens Against the High Cost of Living, a protest group established to lobby against ending the subsidies. In China, per capita meat consumption has increased 150 percent since 1980. The price of pork has jumped 58 percent in the past year. Beef is becoming a weekly indulgence. At the same time, increased cost of food staples in China threatens to wreak havoc. Beijing has been selling grain from its reserves to hold down prices, said Jing Ulrich, chairman of China equities for JP Morgan. "But this is not solving the root cause of the problem. The cause of the problem is a supply-demand imbalance. Demand is very strong. Supply is constrained. It is as simple as that," Ulrich said. Chinese Premier Wen Jiabao says fighting inflation from shortages of key foods is a top economic priority. Inflation reached 7,1 percent in January, the highest in 11 years, led by an 18,2 percent jump in food prices. Meanwhile, record oil prices have boosted the cost of fertiliser and freight for bulk commodities - up 80 percent last year compared with 2006. The oil spike has also turned up the pressure for countries to switch to biofuels, which the FAO says will drive up the cost of corn, sugar and soybeans "for many years to come". Italians are feeling the pinch in pasta, with consumer groups staging a one-day strike in September. Italians eat an estimated 27kg of pasta per capita a year. The protest was merely symbolic because Italians typically stock up on pasta. But in the next two months after the protest pasta consumption dropped 5%, said farm lobbyist Rolando Manfredini. "The situation has gotten even worse," he said. In decades past, farm subsidies and support programmes allowed major grain exporting countries to hold large surpluses, which could be tapped during food shortages to keep prices down. But new liberal trade policies have made agricultural production much more responsive to market demands - putting global food reserves at their lowest in a quarter century. Without reserves, bad weather and poor harvests now have a bigger impact on prices. "The market is extremely nervous. With the slightest news about bad weather, the market reacts," said economist Abbassian. That means that a drought in Australia and flooding in Argentina, two of the world's largest suppliers of industrial milk and butter, sent the price of butter in France soaring 37 percent. The same climate crises sparked a 21 percent rise in the cost of milk. Already, there's a lot of suspicion among consumers. "They don't understand why prices have gone up like this," said Nicole Watelet, general secretary at the Federation of French Bakeries. "They think someone is profiting from this. But it's not us. We're paying." Food costs worldwide spiked 23 percent from 2006 to 2007, according to the FAO. Grains went up 42 percent, oils 50 percent and dairy 80 percent. Economists say that for the short term, government bailouts will have to be part of the answer to keep unrest at a minimum. In recent weeks, rising food prices sparked riots in the West African nations of Burkina Faso, where mobs torched buildings, and Cameroon, where at least four people died. "We need a response on a large scale, either the regional or international level," said Brian Halweil of the environmental research organisation Worldwatch Institute. "All countries are tied enough to the world food markets that this is a global crisis." Poorer countries can speed up the adjustment by investing in agriculture, experts say. If they do, farmers can turn high prices into an engine for growth. - Sapa-AP
Last Updated ( Friday, 04 April 2008 )