Food price surges “worrying”

The food price surges are worrying governments and non-governmental organisations (NGOs) around the world.

Looking at it from a global perspective, and possibly with the spectre of food riots in the back of their minds, the G20, meeting a couple of weeks ago said the food price situation is “worrying“. However, they have held back from calling an emergency meeting now, preferring to wait until late-September or early-October when Washington has assembled some more crop forecast information. It was noted, however, that rice harvests are stable.

In the meantime, European banks are cooling on food commodity speculation, as it is said to be contributing to the commodity price surges, and are considering regulation. Others, including Sumiter Singh Broca a policy officer with the UN’s FAO, don’t agree entirely.

“While speculation may have added to the volatility of food prices, it is hard to argue that the increased volume of speculation would have made food prices more volatile in the absence of real shocks,” he argues in an article written for RepRisk Insight, a new e-zine.

“Farm subsidies and protection in some OECD countries have affected the volume and efficiency in agriculture and discouraged production in some countries, increasing their dependence on imports and hence their vulnerability to price shocks.”

He suggests increasing credible information on global food markets and enhancing transparency will reduce “panic-driven price surges” and enable better informed policy decision making.

Call to ‘stress-test’ the system

Recent research released last week by major international non-governmental organisation Oxfam ‘Extreme Weather: Extreme Prices’ ahead of UN talks in Bangkok aiming to tackle climate change is said to show that the full impact of climate change on future food prices is being underestimated. The research, carried out by Dirk Willenbockel of the Institute of Development Studies, looks at the impact of extreme weather scenarios on food prices by 2030.

Spikes, such as the current US drought, would be a massive blow to the world’s poorest who today spend up to 75 percent of their income on food, says Oxfam’s climate change policy adviser, Tim Gore. He calls for governments to ‘stress-test’ the global food system under climate change to identify where the world is most vulnerable.

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