World food prices at an historic high (Report)

photo courtesy UN News(HN, February 3, 2011) --  World food prices have surged, for the seventh consecutive month, to a new historic peak in January, according to the updated FAO Food Price Index, a commodity basket that regularly tracks monthly changes in global food prices.

The index averaged 231 points in January and was up 3.4 percent from December – the highest level since the FAO started to measure in 1990 and higher than in June 2008 when the cost of food sparked violent protests in countries including Egypt, Haiti and Cameroon.

“These high prices are likely to persist in the months to come, FAO economist Abdolreza Abbassian said.

The individual group components of the index, apart from meat, all registered rises in January.

The Cereal Price Index averaged 245 points in January reflecting rises in the price of wheat and grain which had already gone up due to poor weather conditions this past year in countries such as Russia and the Ukraine and was driven higher by flooding in Australia, which is a major wheat exporter.

Political unrest

The high price of food seems to have been the spark that has unleashed a series of anti-government demonstrations, protests in several countries in the Middle East, beginning in Tunisia, where a young man set himself on fire after being prevented from selling fruits and vegetables, and spreading to Algeria, Yemen, Jordan and Egypt.

The Middle East and North Africa are the two regions that import the largest amount of cereal and countries in the area have been hit especially hard by the harvest shortages in Russia and the Ukraine this year.

Today the Moldovan government has decided to ban all wheat exports until the next harvest in an effort to prevent a large increase in the price of bread. The Prime Minister stated that the order should have been made earlier to avoid the “panic” that he says has already taken hold of the population.

wheat, file photoChallenges

Surging global food prices are just one of the many challenges that people face throughout the world. Climate change, growing population, and water sources are also affecting the overall food production and availability. As many countries grow increasingly dependent on food imports, they grow more vulnerable to natural disaster and market fluctuations taking place half-way around the world from them.

In India, The Financial Times reported earlier this week that food prices have hit their highest point in more than a year. Food prices are up by at least 18 percent from last year in a country where millions are spending more than 50 percent of their total income on food.

Rises are particularly high for dairy products, up 6.2% from December. Prices were driven higher by a combination of lower supply and increasing demand in emerging economies such as China and India.

The demand for food is expected to continue to grow as a result both of population grown and rising incomes according the FAO. Demand for cereals (for food and animal feed) is projected to reach some 3 billion tons by 2050. Annual cereal production will have to grow by almost a billion tons (2.1 billion tons today), and meat production by over 200 million tons to reach a total of 470 million tons in 2050, 72 percent of which will be consumed in developing countries, up from the 58 percent today.

The production of biofuels could also increase the demand for agricultural commodities, depending on energy prices and government policies.

World Bank President Robert Zoellick has asked global leaders to “put food first” and tackle the problem of price volatility.

“We are going to be facing a broader trend of increasing commodity prices, including food commodity prices”, he said.

Commodities prices have been on the rise generally with copper hitting a record high of $10,000 a ton.

Oil was also up on Thursday with Brent crude rising to $103.37 a barrel.

- HUMNews Staff

Soaring Food Prices Cause Concern Worldwide (Report)

(PHOTO: Bikyamasr.com)(HN, January 6, 2011) - Noah commandeers his battered taxi through the early morning haze of Nigeria’s capital, Abuja, wondering how he will come up with the money to pay for a trip to the market. Not only has the price of produce shot up in recent months, the price of parking at the market has double in recent weeks.

Noah’s worries were confirmed this week by the UN’s Food and Agricultural Organization (FAO), which reported that its food price index – a basket tracking the wholesale cost of wheat, corn, rice, oil seeds, dairy products, sugar and meats, has jumped to a record high – even surpassing prices that sparked riots in more than 30 countries – including Haiti, Somalia and Cameroon - in 2007-2008.

While the price of staples such as rice and wheat are below the crises level, sticker shock in markets around the world is being caused by corn, sugar, meat and vegetable oil.

“We are entering a danger territory,” Abdolreza Abbassian, an economist at the FAO told reporters Wednesday.

(GRAPH: FAO) But some believe the world food supply is more fragile than it ever was, mostly because of extreme weather worldwide last year. Major wheat producers such as Ukraine and Russia have banned exports of wheat in 2010 after extremely poor harvests. And recent severe flooding in Australia’s agricultural heartland of Queensland is already having global repercussions on the world food supply.

This week, young people in the capital of Algiers, Algeria, rioted mostly because of rising food prices – including oil, sugar and flour.

There is also evidence to suggest that in the poorest countries, mothers are being forced by rising prices to cut back on essentials. In Niger - where one in four children die before their fifth birthday, mainly due to malnutrition – record numbers of children are being admitted to the country’s 822 therapeutic feeding centres, according to UNICEF.

Even in developed countries, people in the food business are being forced to cope using innovative means. Cynthia Thomet, co-owner of Atlanta’s Lunacy Black Market, a trendy eatery, said fluctuating prices of produce means much more frequent menu changes.

The sharp increase in commodity prices has prompted food companies like General Mills, Kraft, Sara Lee, Kellogg and ConAgra Foods to drop discounts and start rising prices on many products, said Canada’s Globe and Mail newspaper.

According to the FAO not only is their Food Price Index which tracks 55 commodities in total at a record high, but December 2010 was the sixth month in a row of surging prices - the highest since records began in 1990. The organization says it fears that prices will continue to soar in coming months as supply will fall short of world demand.

(PHOTO: City Farmer)Additionally, in a continuing to struggle world economy rising food prices would see consumers left with less money for discretionary spending on things like eating out and retail items as every day eating becomes more expensive.

Compounding the issue is the growing global population, scheduled to top 7 billion people sometime this spring.  The FAO has previously warned that worldwide food production must rise by 70% by 2050 when the global population will increase to 9.1 billion people, mostly in Asia and Africa.

--- By HUMNEWS’ staff

(Report) Tackling hunger in Nicaragua

(photo: UN News) (HN, October 26, 2010) -- In an effort to check rising rural poverty and hunger in Nicaragua, the United Nations Food and Agriculture Organization (FAO) is helping the country’s government to support small-scale farmers boost their production of beans, maize, rice and other staple crops.

The agency said that there are 52.5 million hungry people in Latin America, citing high food prices and the global recession as among the main reasons for the region’s increasing food insecurity.

Although Nicaragua has made strides in the fight against hunger and poverty, it is still the second poorest country in the region after Haiti. In 2009 the GDP fell by almost 3% due to decreased export demand in the US and Central American markets, lower commodity prices for key agricultural exports, and lower remittance growth – remittances are equivalent to almost 15% of GDP.

In Nicaragua, poverty is a rural phenomenon, with two out of three people in the country-side living on less than $1 a day.

FAO is working with the Ministry of Agriculture and the European Union (EU) to help farmers’ associations increase their yields through a two-year, €3 million scheme which will, among other activities, focus on the delivery of high-quality seeds as well as the provision of technical support and marketing assistance  

During the planting season which lasted from May to June, nearly 5,000 hectares of land were planted with improved bean, maize and rice seeds provided by FAO to more than 4,000 farmers.

No results are available yet, but looking back on the harvest of late last year, Leonard Fagot, the agency’s project coordinator, said he is optimistic.  At the time, FAO assistance led to productivity increases of up to three times the national average in the central area of Jinotega.

Drought and pests hit the department of Nueva Guinea in south-eastern Nicaragua, and yields remained slightly under average. Nevertheless, Fagot is looking forward to the upcoming season. Many farmers will come and work with us again.

Related economic information

The US-Central America Free Trade Agreement (CAFTA) has been in effect since April 2006 and has expanded export opportunities for many agricultural and manufactured goods. Textiles and apparel account for nearly 60% of Nicaragua's exports, but increases in the minimum wage during the ORTEGA administration will likely erode its comparative advantage in this industry. Nicaragua relies on international economic assistance to meet internal- and external-debt financing obligations. Foreign donors have curtailed this funding, however, in response to November 2008 electoral fraud. In early 2004, Nicaragua secured some $4.5 billion in foreign debt reduction under the Heavily Indebted Poor Countries (HIPC) initiative, and in October 2007, the IMF approved a new poverty reduction and growth facility (PRGF) program.

- HUMNews Staff (sources: UN, FAO, IMF)