Mon, Aug 20, 2012 - Page 6 News List

World must get ready for higher food prices: experts

COST OF LIVING:Drought has hit farms in the US, and rice-exporter India has seen little rain, leading experts to call for a temporary suspension of biofuel reserves


US President Barack Obama walks around the McIntosh family farm with its owners to view drought-ridden corn fields in Missouri Valley, Iowa, on Monday last week.

Photo: Reuters

With drought parching farms in the US and near the Black Sea, weak monsoon rains in India and insidious hunger in Africa’s Sahel region, the world could be headed toward another food crisis.

Asia should keep a catastrophe at bay with a strong rice harvest, while the G20 group of industrialized and emerging economies tries to parry the main threat, soaring food prices.

“We have had quite a few climate events this year that will lead to very poor harvests, notably in the United States, with corn, or in Russia, with soya,” Philippe Pinta of the French farmers’ federation FNSEA said.

“That will create price pressures similar to what we saw in 2007-2008,” he added in reference to the last global food alert, when wheat and rice prices nearly doubled.

In India, “all eyes will be on food inflation — whether the impact of a weak monsoon feeds into food prices,” Samiran Chakraborty, regional head of research at Standard Chartered Bank was quoted by Dow Jones Newswires as saying.

Monsoon rains were 15.2 percent below average in the middle of the month, according to latest data from India weather bureau, and Asian rice prices are forecast to rise by as much as 10 percent in the coming months as supplies tighten.

India and Thailand are two of Asia’s leading rice exporters.

Indian Food Minister Kuruppasserry Varkey Thomas told parliament this month that prevailing conditions “could affect the crop prospects and may have an impact on prices of essential commodities.”

However, despite that warning, the UN Food and Agricultural Organization (FAO) expects rice output to slightly surpass “excellent results” recorded last year, though it cut its global forecast for production of unmilled rice to about 725 million tonnes from its previous figure of 732 million tonnes.

The world is feeling the onset of the El Nino weather phenomenon, which has a natural warming effect, is active in the western Pacific and is expected to last until winter in the northern hemisphere, according to Japanese meteorologists.

The US farm belt has been ravaged by the most stifling drought since the 1950s, and the country’s contiguous 48 states have just sweltered through the hottest July on record.

Corn production is probably at the lowest level in six years, the US Department of Agriculture said, and curtailed production will likely send corn and soybean prices to record highs, it added.

“Cereal prices have shot up, with an increase in [corn] prices of almost 40 percent since June 1,” strategists at the CM-CIC brokerage said.

Commerzbank commodity experts said high temperatures and drought around the Black Sea “have resulted in wheat crop shortfalls on a scale that cannot yet be predicted with any accuracy.”

AgResource Co president Dan Basse told the Australian Broadcasting Corp last week that the Australian harvest could play a role in easing the food shortage.

“We need every metric tonne of wheat and grain the Australian farmers can produce,” Basse said. “Anything that the Australian farmer can do to assure or boost his production should be profitable in the year ahead.”

Jean-Rene Buisson, head of French national association of food industries ANIA said: “All products based on cereals, including meat, will be affected by price increases, not necessarily by September, but definitely during 2013.”

In China, food prices are considered politically sensitive and account for up to a third of a consumer’s average monthly budget, government statistics show.

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