'One poor harvest away from chaos' (Jan 7, 2011)
Millions of the world's poorest people and the state of the global economy are threatened by the food price rises, writes Geoffrey Lean. - 'Within a decade," promised the top representative of the world's mightiest country, "no man, woman or child will go to bed hungry." Dr Henry Kissinger, at the height of his powers as US Secretary of State, was speaking to the landmark 1974 World Food Conference. Since then, the number of hungry people worldwide has almost exactly doubled: from 460 million to 925 million. And this week the airwaves have been full of warnings that the formidable figure could be about to increase further, as a new food crisis takes hold. Some experts warned that the world could be on the verge of a "nightmare scenario" of cut?throat competition for the control of shrinking supplies. The cause of such alarm? On Wednesday, the Food and Agriculture Organisation (FAO) reported that global food prices had hit a record high and were likely to go on rising, entering what Abdolreza Abbassian, its senior grains economist, called "danger territory". That is bad enough for Britain, adding to the inflationary pressures from the soaring cost of oil and other commodities, not to mention the VAT increase. But for the world's poor, who have to spend 80 per cent of their income on food, it could be catastrophic.
Analysis: Rising food prices bring host of political risks (Jan 6, 2011)
(Reuters) - Record food prices will hit the world's poorest hardest, raising the risk of riots, export bans, foreign-owned farmland expropriation and further price spikes fueled by short-term investors. The UN Food and Agriculture Organization said on Wednesday food prices hit a record high in December and could rise further on erratic global weather patterns. For the first time they outstripped levels reached in early 2008, when spiraling prices prompted riots in countries including Haiti, Egypt and Cameroon and brought demands for tighter commodity market regulation. The potential humanitarian, political and business impact -- particularly in impoverished states where food makes up the largest component of the inflation basket -- is already alarming policymakers and senior officials. "Food price increases impact the poor hardest as food is a higher proportion of their incomes," said James Bond, chief operating officer of the World Bank's political risk insurance arm the Multilateral Investment Guarantee Agency (MIGA). "It creates significant tension in poorer countries, exacerbates standard of living disparities and is a major source of unrest."The 2008 price spike came to an abrupt end in September that year with the global crash that followed the demise of Lehman Brothers, sucking borrowed money out of markets as lenders called in their debts.But right now, no one expects that to happen again. So far, experts say weather-related supply shocks -- floods in Australia, drought in Argentina, dry weather and fires in Russia and potentially crop damaging frosts in Europe and North America -- were largely to blame. But they worry politics and markets could soon take over to produce a vicious circle.
"The danger is that what happens now is that you get a second shock as countries can respond by imposing export bans and financial markets investors pile in for short-term investment, pushing prices much higher, as they did in 2008,"
said Maximo Torero, divisional director for markets, trade and institutions at Washington DC's International Food Policy Research Institute (IFPRI).
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