With world food prices soaring in early 2011, Rajiv Bi swas and Danika Biswas examine the risks facing Asean.
“There are people in the world so hungry, that God cannot appear to them except in the form of bread.”- Mahatma Gandhi.
At the World Economic Forum held in Davos in January 2011, government and business leaders identified food security and rising global food prices as one of the key risks facing the world in 2011. Even as leaders discussed these issues, dramatic political upheaval was taking place in the Middle East, as popular uprisings in Tunisia and Egypt gained momentum. These political revolutions were triggered in part by the rapid escalation in staple food prices for key cereals, albeit just one of the many contributing factors to the turmoil.
THE RISE IN GLOBAL FOOD PRICES With global food prices continuing to soar in early 2011 due to a number of supplyside shocks to key agricultural commodities, world agricultural commodity prices are again approaching their 2008 peak. For Asean countries, this again highlights risks and vulnerabilities related to food security, only three years after the food crisis in 2008 caused by escalating rice prices.
Despite being the world’s fastest growing economic region, developing Asia remains highly vulnerable to the impact of rising food prices. In 2009, estimates by the Food and Agriculture Organization of the United Nations indicated that 60 million Asians had joined the ranks of the undernourished due to surging world food prices, with a total of around 640 million Asians estimated to be undernourished that year.
The current rise in world food prices
reflects a number of supply-side
shocks for key agricultural commodities.
The severe Russian drought
in 2010 pushed up world grain prices
sharply, with drought conditions in a
number of key Chinese wheat-growing
regions in early 2011 also raising
concerns that China may need to
import significant quantities of
grain in 2011 to rebuild buffer
stocks. In stark contrast, the
floods in Australia have
destroyed much of the sugar cane crop
in Queensland, which has also pushed up
world sugar prices. Political risk is also a
factor in some countries, with a civil war
in the Ivory Coast, a key cocoa-exporting
country, having disrupted its cocoa exports.
Other major commodities that have experienced
large price rises include cotton and
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