Thursday, January 06, 2011

World food prices reach record high

Back in 2008, when food prices reached record levels people died from rioting over the issue. The food prices have returned to those records set a couple of years ago, and the United Nations warns that they still could go higher.

From the Guardian, writer Jill Treanor takes a look at the latest survey of food prices around the world.

An index compiled monthly by the United Nations surpassed its previous monthly high – June 2008 – in December to reach the highest level since records began in 1990. Published by the Rome-based Food and Agriculture Organisation (FAO), the index tracks the prices of a basket of cereals, oilseeds, dairy, meat and sugar, and has risen for six consecutive months.

Abdolreza Abbassian, FAO economist, told the Guardian: "We are entering a danger territory." But he stressed that the situation was not yet as bad as 2008.

Sugar and meat prices are at record levels, while cereal prices are back at the levels last seen in 2008, when riots in Haiti killed four people and riots in Cameroon left 40 dead.

Abbassian warned prices could rise higher still, amid fears of droughts in Argentina and floods in Australia and cold weather killing plants in the northern hemisphere.

"There is still room for prices to go up much higher, if for example the dry conditions in Argentina tend to become a drought, and if we start having problems with winterkill in the northern hemisphere for the wheat crops," Abbassian said.

Prices have been rising steadily but Abbassian said that by now he had been expecting food prices to start to fall because many poorer countries had good harvests last year.

1 comment:

Bud Fox said...

This could turn into a mess extremely fast and it is very unfortunate, especially because the Fed doesn't even consider food prices in its inflation valuations because it is "too volatile" despite the fact that it effects everyone.