The UN's Food and Agriculture Organization's (FAO) announced on Thursday that world food prices rose in September. After experiencing the most widespread drought in 50 years, corn and soybean prices in the US soared to record highs over the summer. Compounded with the droughts in Europe and central Asia, there has been concern about possible food shortages, raising fears of renewed crisis.
The FAO's price index—a measure of the monthly change in international prices of a basket of food commodities—rose 1.4 percent to an average of 216 points in September after remaining stable at 213 points in August. FAO's index remains below February 2011's peak of 238 points, when high food prices fueled the Arab Spring uprisings in the Middle East and North Africa, but, according to Reuters, "current levels are very close to those seen in 2008 which sparked riots in poor countries."
"Prices are remaining high... prices are sustained, it's highly unlikely we will see a normalization of prices anytime soon," FAO senior economist Abdolreza Abbassian told Reuters. "Volatility is not going to go away, if anything it may even intensify further in coming months," he said.
The FAO also predicts a decline in global cereal production this year. According to the government, drought in the US has left half of the nation's corn in "poor to very poor condition."
A government survey (pdf) last month estimated a national average yields of 122.8 bushels of corn per acre, the lowest in more than 15 years, and a 15 percent drop in soybeans yields.
In addition to the global impact on food prices, rural farmers in the US have been devastated. The waning supply means higher prices, which benefits grain farmers for the short term. However, it is not such good news for livestock farmers who depend on those crops to feed their animals.
The New York Times reports on some of the individuals who have had to sell off significant numbers of livestock in anticipation of the diminished returns next year. Missourians Theresa and Carl Bettles—whose 130 cows and crops produced a quarter of their average annual yields—are anticipating a $40,000 drop in earnings. The drought has forced them to dip into a retirement fund to pay their daughter’s college expenses.
“If it’s doing this for the next two years, I can’t see us being able to keep going,” Theresa said.
According to Abbassian of the FAO, there is a ministerial meeting that goes beyond the G20 Summit to be held on October16 to discuss food prices.