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Record worldwide food prices may remain high because the output response needed to ease supply concerns may take years, the International Monetary Fund (IMF) recently said.
Increasing incomes in developing countries have boosted demand for meat and dairy, requiring more grain for livestock feed and land for grazing animals, Thomas Helbling, an adviser for the IMF’s research department, and Shaun Roache, an economist, wrote in an article. Rising demand for biofuels and adverse weather also have tightened food supplies, the IMF said.
“Over time, supply growth can be expected to respond to higher prices, as it has in previous decades, easing pressure on food markets, but this will take time counted in years, rather than months,” according to an article published in the agency’s Finance & Development magazine.
The global food price index, compiled by the United Nations’ Food & Agriculture Organization (FAO), surged to a record in February as all food groups except sugar rose, the agency said. Rising food costs and corruption sparked political unrest across North Africa and the Middle East, ousting leaders in Tunisia and Egypt, the largest buyer of wheat.
“There’s a risk that the current price spike could persist for longer than the 2007-2008 experience,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia , said. “There are more commodities involved in this current spike and that means it’s going to take longer to rebuild the inventories of all those back up to what we would deem safer levels.”
Global inventories for all grains will drop 13 percent before the next harvest, the U.S.
Department of Agriculture estimates. That’s the first decline since 2007. Surging food prices the following year sparked more than 60 riots from Haiti to Egypt. Increasing demand is causing isolated food shortages and accelerating inflation in developing countries even as it boosts farmers’ incomes and shifts planting strategies.
While stockpiles will decline, supplies of rice, the staple food for more than half of the world’s population, may be sufficient to avert a repeat of the 2008 crisis, Abdolreza Abbassian, a senior economist at the FAO, said
“Probably rice is the commodity which is separating us from a food crisis,” Abbassian said. “I’ve never loved rice more than now,” he concluded.
Top News from Southeast Asia
March 7, 2011
These were the most significant news stories published by Asean Affairs during the week of February 26-March 4..