The Glade 4.0

World food prices at fresh high, says UN

Global food prices rose to a fresh high in December, according to the UN's Food and Agricultural Organisation (FAO).

Its Food Price Index went above the previous record of 2008 that saw prices spark riots in several countries.

Soaring sugar, cereal and oil prices had driven the rise, the report said.

The index, which measures monthly price changes for a food basket composed of dairy, meat and sugar, cereals and oilseeds, averaged 214.7 points last month, up from 206 points in November.

It stood at 213.5 points at the high of June 2008 - sparking violent protests in countries including Cameroon, Haiti and Egypt.

There were further riots over food prices in Mozambique in September last year.

However, despite high prices, FAO economist Abdolreza Abbassian said that many of the factors that triggered food riots in 2007 and 2008 - such as weak production in poor countries - were not currently present, reducing the risk of more turmoil.

But he added that "unpredictable weather" meant that grain prices could go much higher, which was "a concern".

'Tight situation'
The current spike in prices is being caused primarily by increases in the cost of sugar and, more importantly, cereals, according to the International Food Policy Research Institute.

The price of wheat in particular has risen sharply. This is because wildfires last year in Russia, which accounts for 11% of global exports, resulted in an export ban, the institute's director of markets, trade and institutions, Maximo Torero, told the BBC.

The recent floods in Australia, which also accounts for 11% of global exports, has compounded the problem, he said.

The price of corn has also risen, because of greater support for biofuels in the US and the increased price of oil, which makes biofuels more attractive.

Droughts in Argentina, the world's second biggest exporter of corn behind the US, have also pushed the price up, Mr Torero said.

"The situation is very tight. If we have more natural disasters, we could have a problem," he said.

Australian floods
Overall global food prices have risen by an average of more than 80% in the past 10 years, according to figures from the FAO released last year.

Analysts say that as well as environmental issues, fast-growing world population and the increased demand for biofuels has further put pressure on crop supplies.

"Rising food prices will have an effect almost all over the world but especially in poor countries where food and energy are the major things people spend their money on," said George Magnus, senior economic adviser to UBS.

"There's a risk, I wouldn't say a huge risk, but some risk of higher energy prices and higher food prices being very destabilising in some countries.

"We saw that in 2008 and in Mozambique last year and it's something to watch."

'Particularly worrisome'
The news came amid concerns about inflation in the prices of other key commodities.

Copper prices went into 2011 at record highs - in a rally driven by increased demand from the global economic recovery and that fact that most countries are holding low stockpiles.

And the International Energy Agency (IEA) said on Wednesday that the current high price of oil would threaten economic recovery in 2011.

Oil import costs for countries in the Organisation for Economic Co-operation and Development had risen 30% in the past year to $790bn (£508bn), it said.

Mr Magnus said that if oil returned above $100 a barrel this would be "particularly worrisome".

"It could make central bankers nervous, leave them thinking that inflation was getting out of hand and prompt them to raise interest rates faster than they should. That would damage an already fragile recovery," he said.

"And higher commodity prices could sap the world's ability to consume because more and more of our income will be going on energy and food."


Price rises from Nov 2010 to Dec 2010

Sugar - 6.7%
Cereals (including wheat, rice, corn) - 6.4%
Oils - 8%
Source: FAO

The price of corn has also risen, because of greater support for biofuels in the US and the increased price of oil, which makes biofuels more attractive.

To be fair, food prices have absolutely nothing to do with the US economy or the government's policies.

What!?! Are you kidding me? What about all the regulations the US and foreign countries impose on all parts of the food manufacturing chain? What about all the components that are used, such as oil? And what about taxes that are imposed on food companies? All of that is priced into the products we buy. We have monetization of our debt, which will cause rapid inflation, meaning our dollar buys less. This also effects food prices. On top of it, with food regulations being extended to local produce farmers and local food outlets, there will be less competition, which means higher prices for the rest of us. So the government absolutely does affect food prices.

The US dollar being worth less doesn't affect global food prices. Why would it? Also the regulations are the same as they were 10 years ago, they're not the cause of the higher prices now.

Boy, it's a good thing that food isn't included in inflation indices. This could have been bad for the economy, otherwise.

The US dollar being worth less absolutely affects global food prices. Most of the world bases prices on the US dollar, although increasingly less so with the demise of the dollar. When US dollar prices are affected, global inflation occurs. Don't forget how much of the economic market the US alone makes up. It has reprecussions on the entire world when prices in the US are going up.

Energy and food prices are such large portions of our economy and so ridiculously volatile, as to make the inflation index a useless number. They should be monitored, of course, but separately. You won't be able to acertain what the rest of the economy is doing if you lump these in. Numbers are too big, and swing too wide on a regular basis.

Which is what makes metrics that don't take them into account so useless.

What the hell do I care if the cost of TVs and teddy bears inflates at 3% if I can barely afford to eat, heat my home, and get to work because my wage increases are tied/measured against a metric the government invents that doesn't account for them?

In comic strips the person on the left always speaks first. - George Carlin

So what you're saying is that the food price increases are mostly due to US and European extra regulations, and not anything else like energy (fertilizer) prices going up, increased demand in East Asia, etc.?

Which is what makes metrics that don't take them into account so useless.

What the hell do I care if the cost of TVs and teddy bears inflates at 3% if I can barely afford to eat, heat my home, and get to work because my wage increases are tied/measured against a metric the government invents that doesn't account for them?

Facism is not a school of thought, it is a racial slur.

Facism is not a school of thought, it is a racial slur.

No, no ...

The Iconic Image from Scanners ...

In comic strips the person on the left always speaks first. - George Carlin

Facism is not a school of thought, it is a racial slur.

That's disturbingly bad enough to make me vomit.

Now I'm going to have to kill people.

In comic strips the person on the left always speaks first. - George Carlin

What the hell do I care if the cost of TVs and teddy bears inflates at 3% if I can barely afford to eat, heat my home, and get to work because my wage increases are tied/measured against a metric the government invents that doesn't account for them?

You buy the TV and Teddy Bear and then ***** to the government how they need to help you because you cannot afford the necessities?