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Rising food prices push countries to avert crisis

A man holds vegetables as he tries to bargain with the vendor at a market in Jakarta January 4, 2011. The Central Statistics Agency said on Monday that Indonesia's inflation for 2010 came in at 6.96 percent due to rising food prices.


The threat of violent food riots in emerging countries around the world is raising questions of how best to cope with continued pressures from soaring prices for such basics as wheat, rice, meat and soybean.

Flooding in Australia, snowstorms in the Northern Hemisphere, unusually dry weather in South America and rising demand for food staples in countries like China are just a few of the factors playing havoc with the global supply of food and pushing up prices to record levels.

The World Economic Forum's latest report on global risks lists food and energy price volatility as one of five top risks to watch for around the globe.

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"Demand for water, food and energy is expected to rise by 30 to 50 per cent in the next two decades while economic disparities incentivize short-term responses in production and consumption that undermine long-term sustainability," the report from the forum's Risk Response Network warns. "Shortages could cause social and political instability, geopolitical conflict and irreplaceable environmental damage."

Adding to concerns is the possibility that high food costs in rapidly growing developing countries will put a damper on consumer spending and slow the much-needed global economic rebound.

Already, several people have died in riots protesting high food prices and other issues in Algeria and Tunisia. But so far there has not been the widespread unrest that broke out in many developing countries as a result of high food prices in 2008, despite the fact that prices have climbed higher than they were then.

Among the measures being taken in various parts of the world in hopes of averting another global crisis:


The Middle Kingdom has abandoned plans to import several million tonnes of high-priced corn in 2011, according to published reports.

The country has also been building its strategic reserves of key foodstuffs and raw materials while at the same time dipping into state food stocks in a move to increase domestic supply and keep prices in check. Meanwhile, price controls are being implemented to counter volatility.

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India has banned onion exports. Supplies of lentils and potatoes have improved thanks to new harvests, but the government of Prime Minister Manmohan Singh is under growing pressure from the main opposition party. Vegetable prices have risen by more than 70 per cent in the past year and state-run agencies said they would increase their purchases of certain basics.

More measures have been promised, including regular reviews of imports and exports of essential commodities.

South Korea

South Korea said it plans to reduce import tariffs on key staples such as powdered milk and fish. The central bank raised interest rates to tackle the inflation threat.

The country is also helping co-ordinate efforts to step up a global effort among the G20 members to find solutions and avoid a crisis.

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The government implemented food-price control measures and cut fuel taxes. But some experts warn that such moves will undermine trade liberalization efforts throughout the Middle East and North Africa.

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More

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