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Today's Top News
Global Food Prices Hit New Record High
Global food prices have hit a new record high, amid fears that the escalating cost of bread and meat is adding to the turmoil in the Middle East.
The United Nations Food and Agriculture Organization (UN FAO) gave warning that the high prices, already above levels in 2008 which sparked riots, were likely to rise further.
The FAO measures food prices from an index made up of a basket of key commodities such as wheat, milk, oil and sugar, and is widely watched by economists and politicians around the world as the first indicator of whether prices will end up higher on shop shelves.
The index hit averaged 230.7 points in January, up from 223.1 points in December and 206 in November. The index highlights how food prices, which throughout most of the last two decades have been stable, have taken off in alarming fashion in the last three years. In 2000 the index stood at 90 and did not break through 100 until 2004.
Surging food prices have come back into the spotlight after they helped fuelled protests that toppled Tunisia's president in January. Food inflation has also been among the root causes of protests in Egypt and Jordan, raising speculation other nations in the region would secure grain stocks to reassure their populations.
Abdolreza Abbassian, an economist at the FAO, said: "The new figures clearly show that the upward pressure on world food prices is not abating.
"These high prices are likely to persist in the months to come. High food prices are of major concern especially for low-income food deficit countries that may face problems in financing food imports and for poor households which spend a large share of their income on food."
Experts point out that, in theory, the situation is not as bad as in 2007 to 2008, when the world faced a genuine shortage of food. This time around there are plenty of stocks, particularly wheat, that are being stored. In Britain arable farmers have been sitting on grain from last year's harvest and been able to sell wheat at £200 a ton, double the price of just a few years ago.
Experts said that hoarding of food by some governments was making the problem worse.
In the run-up to the 2007/2008 food price crisis, the World Bank estimated that some 870 million people in developing countries were hungry or malnourished. The FAO estimates that number has increased to 900 million.
Robert Zoellick, the president of the World Bank, urged global leaders to "put food first" and wake up to the need to curb increased price volatility.
"2008 should have been a wake-up call, but I'm not yet sure all the countries in the world that we need to support this have woken up to it," he said.
Indonesia, southeast Asia's biggest economy, last week bought 820,000 tonnes of rice, nearly five times what it had originally set out to buy, lifting rice prices - although rice is one commodity that remains well below its 2008 prices. It has also suspended import duties on rice, soybeans and wheat.
Algeria last week said it had bought almost a million tonnes of wheat, bringing its bread wheat purchases to at least 1.75 million since the start of January, and ordered an urgent speeding up of grain imports, a move aimed at building stocks.
Wayne Gordon, a grains analyst for Rabobank, said: "Some of the demand story is centred around high food prices then tend to lead to hoarding by a number of countries into their strategic reserves.
"So not only are they purchasing for current consumption, but they are also trying to build up strategic reserves, which basically are a bit of a double-barrelled demand event."
Severe drought in the Black Sea last year, heavy rains in Australia and dry weather in Argentina and anticipation of a spike in demand after unrest in north Africa and the Middle East has also helped drive grain prices even higher.
The FAO's Sugar Price Index soared to a record high of 420.2 points from 398.4 points in December.
Its Cereals Price Index, which includes prices of main food staples such as wheat, rice and corn, rose to an average of 244.8 points in January, the highest level since July 2008 but below its peak in April 2008, the data showed.
The Oils Price Index rose to 277.7 points in January from 263.0 points in December and came close to the June 2008 record level.