SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
World Food Prices Enter 'Danger Territory' to Reach Record High
UN food price index rises for sixth month in a row to highest since records began in 1990
Jan 05, 2011
Soaring prices of sugar, grain and oilseed drove world food prices to a record in December, surpassing the levels of 2008 when the cost of food sparked riots around the world, and prompting warnings of prices being in "danger territory".
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, 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 people 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.
But this has not happened after unpredictable weather caused a poor wheat crop in Russia. Last year European wheat prices doubled, US corn prices rose more than 50% and US soybean prices jumped more than 30%.
The current floods in Australia have the potential to affect prices for commodities such as sugar and cane growers are warning of production problems for up to three years. Wheat supplies are expected to affected - Australia is the fourth largest wheat exporter - and the country is also the largest exporter of coking coal, production of which is also being affected by the floods.
At the same time demand from emerging countries such as China and India was strong.
But, Abbassian played down concern that the rising food prices could cause fresh riots as happened two years ago when the price of cereals was largely the cause of the problem along with a dramatic spike in the price of oil. He noted that another rise in the oil price - currently around $95 a barrel - could exacerbate the problem. While oil is rising in price, and forecasters are suggesting it could hit $100, it is still well below the $145 peak it reached in July 2008 on a wave of buying by international speculators.
The FAO food index hit 215 points last month, up from 206 in November, to break the 213.5 registered in June 2008. It shows a dramatic rise in prices for food in a decade. In 2000 the index stood at 90 and did not break through 100 until 2004.
Economists are on guard for spikes in inflation around the world, which might force up interest rates which in the developed world are at historically low levels as a result of the banking crisis.
Julian Jessop, chief international economist at Capital Economics, said: "The upward pressure on inflation this year from the recent surge in the cost of agricultural commodities will be much greater than that from the pick-up in oil prices".
Jessop said the price of oil was rising largely as result of demand caused by a rebound in global industrial activity. "In contrast, the surge in agricultural food prices is largely a consequence of supply shocks, such as droughts in major wheat producing countries. These have been compounded by speculative pressures."
An Urgent Message From Our Co-Founder
Dear Common Dreams reader, It’s been nearly 30 years since I co-founded Common Dreams with my late wife, Lina Newhouser. We had the radical notion that journalism should serve the public good, not corporate profits. It was clear to us from the outset what it would take to build such a project. No paid advertisements. No corporate sponsors. No millionaire publisher telling us what to think or do. Many people said we wouldn't last a year, but we proved those doubters wrong. Together with a tremendous team of journalists and dedicated staff, we built an independent media outlet free from the constraints of profits and corporate control. Our mission has always been simple: To inform. To inspire. To ignite change for the common good. Building Common Dreams was not easy. Our survival was never guaranteed. When you take on the most powerful forces—Wall Street greed, fossil fuel industry destruction, Big Tech lobbyists, and uber-rich oligarchs who have spent billions upon billions rigging the economy and democracy in their favor—the only bulwark you have is supporters who believe in your work. But here’s the urgent message from me today. It's never been this bad out there. And it's never been this hard to keep us going. At the very moment Common Dreams is most needed, the threats we face are intensifying. We need your support now more than ever. We don't accept corporate advertising and never will. We don't have a paywall because we don't think people should be blocked from critical news based on their ability to pay. Everything we do is funded by the donations of readers like you. When everyone does the little they can afford, we are strong. But if that support retreats or dries up, so do we. Will you donate now to make sure Common Dreams not only survives but thrives? —Craig Brown, Co-founder |
Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
Soaring prices of sugar, grain and oilseed drove world food prices to a record in December, surpassing the levels of 2008 when the cost of food sparked riots around the world, and prompting warnings of prices being in "danger territory".
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, 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 people 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.
But this has not happened after unpredictable weather caused a poor wheat crop in Russia. Last year European wheat prices doubled, US corn prices rose more than 50% and US soybean prices jumped more than 30%.
The current floods in Australia have the potential to affect prices for commodities such as sugar and cane growers are warning of production problems for up to three years. Wheat supplies are expected to affected - Australia is the fourth largest wheat exporter - and the country is also the largest exporter of coking coal, production of which is also being affected by the floods.
At the same time demand from emerging countries such as China and India was strong.
But, Abbassian played down concern that the rising food prices could cause fresh riots as happened two years ago when the price of cereals was largely the cause of the problem along with a dramatic spike in the price of oil. He noted that another rise in the oil price - currently around $95 a barrel - could exacerbate the problem. While oil is rising in price, and forecasters are suggesting it could hit $100, it is still well below the $145 peak it reached in July 2008 on a wave of buying by international speculators.
The FAO food index hit 215 points last month, up from 206 in November, to break the 213.5 registered in June 2008. It shows a dramatic rise in prices for food in a decade. In 2000 the index stood at 90 and did not break through 100 until 2004.
Economists are on guard for spikes in inflation around the world, which might force up interest rates which in the developed world are at historically low levels as a result of the banking crisis.
Julian Jessop, chief international economist at Capital Economics, said: "The upward pressure on inflation this year from the recent surge in the cost of agricultural commodities will be much greater than that from the pick-up in oil prices".
Jessop said the price of oil was rising largely as result of demand caused by a rebound in global industrial activity. "In contrast, the surge in agricultural food prices is largely a consequence of supply shocks, such as droughts in major wheat producing countries. These have been compounded by speculative pressures."
Soaring prices of sugar, grain and oilseed drove world food prices to a record in December, surpassing the levels of 2008 when the cost of food sparked riots around the world, and prompting warnings of prices being in "danger territory".
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, 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 people 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.
But this has not happened after unpredictable weather caused a poor wheat crop in Russia. Last year European wheat prices doubled, US corn prices rose more than 50% and US soybean prices jumped more than 30%.
The current floods in Australia have the potential to affect prices for commodities such as sugar and cane growers are warning of production problems for up to three years. Wheat supplies are expected to affected - Australia is the fourth largest wheat exporter - and the country is also the largest exporter of coking coal, production of which is also being affected by the floods.
At the same time demand from emerging countries such as China and India was strong.
But, Abbassian played down concern that the rising food prices could cause fresh riots as happened two years ago when the price of cereals was largely the cause of the problem along with a dramatic spike in the price of oil. He noted that another rise in the oil price - currently around $95 a barrel - could exacerbate the problem. While oil is rising in price, and forecasters are suggesting it could hit $100, it is still well below the $145 peak it reached in July 2008 on a wave of buying by international speculators.
The FAO food index hit 215 points last month, up from 206 in November, to break the 213.5 registered in June 2008. It shows a dramatic rise in prices for food in a decade. In 2000 the index stood at 90 and did not break through 100 until 2004.
Economists are on guard for spikes in inflation around the world, which might force up interest rates which in the developed world are at historically low levels as a result of the banking crisis.
Julian Jessop, chief international economist at Capital Economics, said: "The upward pressure on inflation this year from the recent surge in the cost of agricultural commodities will be much greater than that from the pick-up in oil prices".
Jessop said the price of oil was rising largely as result of demand caused by a rebound in global industrial activity. "In contrast, the surge in agricultural food prices is largely a consequence of supply shocks, such as droughts in major wheat producing countries. These have been compounded by speculative pressures."
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.
To inform. To inspire. To ignite change for the common good.
News & Opinion
Trending
Common Dreams, Inc. Founded 1997. Registered 501(c3) Non-Profit
Privacy Policy