Grain prices soar globally
Rice shortages are appearing across Asia. In Egypt, the Army is now baking bread to curb food riots.
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“All parties must recognize that the drivers of humanitarian vehicles and their cargo are serving a neutral purpose,” WFP Sudan representative Kenro Oshidari said in a statement.Skip to next paragraph
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Last year, the Food and Agriculture Organization’s food price index increased an unprecedented 40 percent from 2006, and this year it is projected to continue rising. Surging oil prices (in turn, boosting fertilizer and transport costs) combined with a drop in production due to droughts in Australia and the Ukraine have helped to drain global food stocks.
While rice production is rising, consumption is growing faster. The US Department of Agriculture forecast rice stocks to fall to their lowest level since the mid-1970s, and wheat stocks are projected to hit their lowest point since 1946, the year after World War II ended.
These factors, combined with a falling US dollar, steadily rising demand from developing countries, and biofuel policies that mop up excess cereal production, have all helped boost world prices.
The FAO expects food prices to stay high for the next three to five years, presenting a challenge for governments trying to keep domestic food prices low in order to keep poor citizens properly fed and avoid mass protests and social unrest.
Some countries like Vietnam, India, and Pakistan have banned grain exports. On Wednesday, Cambodia’s prime minister ordered a two-month ban on rice exports to neighboring Thailand and Vietnam “to guarantee food security.”
Meanwhile food importers Indonesia, Korea, and Mongolia have cut or reduced import tariffs. As Philippine farmers warned that the country was facing a serious rice shortage, the government signed a deal Wednesday to import 1.5 million metric tons (1.65 million US tons) of rice from Vietnam.
Analysts note that the current shortage isn’t hitting as many people as hard as past shortages. As incomes rise worldwide, food is a smaller portion of the family budget. “Governments have tried to protect domestic prices from fluctuations in international prices, and they have succeeded in the past,” says Sumiter Broca, a policy analyst at the FAO. “The key point is that the proportion of income spent on food is much lower than it used to be, so that provides a cushion. The situation is not as serious as it was in 1974.”
Citizens of Nepal and India now spend about 35 to 40 percent of income on food, down from about 70 to 80 percent in the early 1970s, Mr. Broca says. In developing countries, food costs eat up only about 7 percent of household incomes.