11th January, 2011
The Group of 20 leading economies will sometime this year convene to discuss ways to tackle soaring food prices that are stoking fears of a repeat of the 2008 world food crisis.
Global food prices hit a record high last month, outstripping the levels that sparked riots in several countries in 2008, and key grains could rise yet further, the United Nations’ food agency has said.
Policymakers’ major concern is that if unchecked, rising food prices will lead to social and economic instability by stoking inflation, protectionism and unrest.
Importantly, rising food prices could set back the recovery from the financial crisis by cutting into consumers’ budgets in fast-growing emerging economies that are leading the global revival.
Working-group talks in the G20 are underway, aimed at improving global cooperation to resolve food security problems ahead of a summit in Paris later this year, said Rhee Chang-yong, who represents South Korea at the G20.
Australia, India, Haiti, Egypt, Algeria are among the countries already grappling with food crisis.
Although Nigeria is not on the list, the high cost of commodities in recent times is an indication that the future is not certain.
“France is emphasising food security. As a former host country of G20, we would like to deal with the price volatility problem thoroughly,†Rhee said.
French President Nicolas Sarkozy has asked the World Bank to conduct urgent research on the impact of food prices ahead of G20 meetings later this year, a source familiar with the matter said.
Last year, wheat futures prices rose 47 percent, buoyed by bad weather including drought in Russia and its Black Sea neighbours. U.S. corn rose more than 50Â percent and U.S. soybeans jumped 34 percent.
The UN Food and Agriculture Organisation said in a report last week that sugar and meat prices were at their highest since its records began in 1990. Prices were at their highest since 2008 crisis levels for wheat, rice, corn and other cereals.
During that crisis staple food prices soared and riots broke out in countries from Egypt to Haiti. Import prices jumped, forcing many countries’ trade balances into a deep and costly deficit and several governments in Asia imposed export restrictions on rice.
Still, Robert Prior-Wandesforde, an economist at Credit Suisse in Singapore, said further adverse weather shocks would be needed to drive food commodity prices much above current levels. “The estimated global and exporting countries’ stock-to-use ratios of both wheat and rice are considerably higher today than in 2007-08, making shortages and drastic export bans unlikely,†he said in a report.
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