Hunger grows as global food prices soar

Straits Times 26 Mar 08;

Bad weather, high oil prices, less farmland and rising demand all forcing prices up
MEXICO CITY - IF YOUR grocery bill is going up, you are not alone in facing that problem.

From subsistence farmers eating rice in Ecuador to gourmets feasting on escargot in France, consumers worldwide face rising food prices in what analysts call a perfect storm of conditions.

Freak weather is a factor. But so are dramatic changes in the global economy, including higher oil prices, lower food reserves, loss of farming land to industrialisation, and growing consumer demand in China and India.

The world's poorest nations still harbour the greatest hunger risk, with deadly food riots breaking out in Egypt and Cameroon.

But food protests now crop up even in Italy.

The price of spaghetti has doubled in impoverished Haiti but well-off Japan is not spared either, with the cost of miso now packing a punch.

'It's not likely that prices will go back to as low as we're used to,' said Mr Abdolreza Abbassian, economist and secretary of the UN Food and Agriculture Organisation's (FAO) Intergovernmental Group for Grains.

'Currently if you're in Haiti, unless the government is subsidising consumers, consumers have no choice but to cut consumption. It's a very brutal scenario, but that's what it is.'

No one knows that better than Haitian Eugene Thermilon, 30, a day labourer who can no longer afford pasta to feed his wife and four children now that its price has nearly doubled to the local equivalent of US$0.57 (S$0.80) a bag. Their only meal on a recent day was two cans of corn grits.

Their hunger has had a ripple effect. Haitian food vendor Fabiola Duran Estime, 31, has lost so many customers that she had to pull her daughter out of kindergarten because she cannot afford the monthly tuition.

In the long term, prices are expected to stabilise.

Farmers will grow more grain for both fuel and food and eventually bring prices down.

Already this is happening with wheat, with more crops to be planted in the US, Canada and Europe in the coming year.

However, consumers still face at least 10 years of more expensive food, according to preliminary FAO projections.

Meanwhile, rising demand for meat and dairy in rapidly developing countries such as China and India is sending up the cost of grain, used for cattle feed.

In China, the food price hikes are both a burden and a boon.

With the rise of the Chinese middle class, per capita meat consumption has risen by 150 per cent since 1980, encouraging people like Mr Zhou Jian to switch from selling auto parts to pork.

The price of pork has jumped 58 per cent in the past year, yet every morning, housewives still crowd his Shanghai shop.

At the same time, rising costs of food staples in China are driving up inflation, forcing Beijing to sell grain from its reserves to hold down prices.

Record oil prices are also forcing food prices up, driving up the cost of everything from fertilisers to transport to food processing.

The oil price spike has also turned up the pressure for countries to switch to biofuels, which the FAO says will drive up the cost of corn, sugar and soybeans 'for many more years to come'.

In Japan, the ethanol boom is hitting the prices of mayonnaise and miso, two important culinary ingredients.

A 1kg bottle of mayonnaise his risen by about 10 per cent in two months to as much as 330 yen (S$4.60) said Mr Daishi Inoue, a cook at a Chinese restaurant.

For countries like Burkina Faso in Western Africa, the situation is dire. Ms Irene Belem, a 25-year-old with twins, struggles to buy milk, which has gone up by 57 per cent in recent weeks.

'We knew we were poor before, but now it's worse than poverty,' she said.

In Egypt, where the price of bread is up 35 per cent and cooking oil 26 per cent, at least seven people have died in fights in queues for subsidised bread.

In the Philippines, amid fears of a looming rice shortage, President Gloria Arroyo yesterday said the government would clamp down on rice hoarders who artificially jack up the commodity's price.

She has tasked Agriculture Secretary Arthur Yap with staking out all government warehouses that stock the subsidised rice varieties 'so he can follow the big 10-wheeler trucks and see where they are bringing rice'.

She warned: 'He is investigating all warehouses, watching them, relicensing them. He shall hit the hoarders.'

ASSOCIATED PRESS, AGENCE FRANCE-PRESSE

Relentless rise in food costs
Countries act to ease the plight of lower income
Today Online 26 Mar 08;

— AGENCIES

IT is not just Singaporeans who are striving to cope with global price rises — particularly of food — with several countries yesterday unveiling a range of measures to mitigate the impact on their populations.

Malaysia's Mr Abdullah Ahmad Badawi announced, as one of the priorities of his second term as prime minister, measures to alleviate the burdens faced by lower-income Malaysians.

In addition, the government would also review the implementation of economic plans to ensure that benefits reached those who needed them the most, even as it continues to work on narrowing the income gaps between and within ethnic groups.

Mr Abdullah's other priorities include drastically reducing crime and fighting corruption, issues that had "resonated with voters", he said yesterday at the Invest Malaysia 2008 conference.

South Korea, on its part, will cut import tariffs on four products and exempt duties on 69 others — including grain and industrial raw materials — to help ease price pressures amid surging global costs for oil and commodities.

The Ministry of Strategy and Finance yesterday said that tariffs on petrol, kerosene, diesel and heavy oil would be cut to 1 per cent from the current 3 per cent each, with effect from Tuesday.

The government also plans to increase low-tariff imports of 14 items, such as corn and soybeans.

The moves are expected to help lower consumer and import prices by about 0.1 per cent and 0.27 per cent respectively, the ministry said.

South Korea's consumer price inflation rate, year-on-year, stood at 3.6 per cent in February — above the central bank's target band of 2.5 per cent to 3.5 per cent for the third month in a row.

In the Middle East, Bahrain has called on the Gulf Cooperation Council to buy food in bulk to bring down prices for consumers in the region.

The grouping comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Bahrain Chamber of Commerce and Industry chairman, Dr Esam Fakhro, said the proposal was still in its early stages.

"The bloc would fight a potentially disastrous inflation that is threatening the region's economies," said Dr Fakhro in a report in the TradeArabia News Service.

From Haiti to France, Ecuador to Japan, consumers are now facing spiralling food prices in what analysts have called a "perfect storm" of conditions.

Freak weather is a factor, as are dramatic changes in the global economy, including higher oil prices — which increases the cost of everything from fertiliser to transport and food processing — as well as rapidly growing consumer demand in China and India for meat and dairy products.

The bad news? Consumers still face at least 10 years of more expensive food, according to early projections by the UN Food and Agriculture Organisation.

Its statistics showed that food costs worldwide spiked by 23 per cent from 2006 to 2007 — grains went up by 42 per cent, oils about 50 per cent and dairy by some 80 per cent.

However, what is rare is that the spikes are hitting all major foods in most countries at the same time.

Food prices rose 4 per cent in the United States last year, the highest rise since 1990.

In Singapore, food inflation was 4.1 per cent in the second half of last year.

In China, inflation reached 7.1 per cent in January, the country's highest in 11 years, led by an 18.2-per-cent jump in food prices.

Why drought in Australia can affect escargot prices in France
Straits Times 26 Mar 08;

IN AN increasingly interlinked world, the price of escargot in France can be affected by drought in Australia.

In decades past, farm subsidies and support programmes allowed major grain exporting countries to hold large surpluses, which could be tapped during food shortages to keep prices down.

But new liberal trade policies have made agricultural production much more responsive to market demands - putting global food reserves at their lowest in a quarter century.

Without reserves, bad weather and poor harvests now have a bigger impact on prices.

'The market is extremely nervous. With the slightest news about bad weather, the market reacts,' said economist Abdolreza Abbassian.

That means that a drought in Australia and flooding in Argentina, two of the world's largest suppliers of milk and butter, sent the price of butter in France soaring by 37 per cent from 2006 to 2007.

Butter can constitute up to 40 per cent of an escargot (snail) dish.

'You can do the calculation yourself,' said Mr Romain Chapron, president of Croque Bourgogne, which supplies escargot. 'It had a considerable effect.'

The same climate crises sparked a 21 per cent rise in the cost of milk, which with butter makes another famous French food item - the croissant.

Panavi, a pastry and bread supplier, has raised retail prices of croissants and pain au chocolat (a French pastry with chocolate bits) by 6 to 15 per cent.

Attempts to control prices in one country often have dire effects elsewhere.

China's restrictions on wheat flour exports resulted in a price spike in Indonesia earlier this year, according to the UN Food and Agriculture Organisation.

'We need a response on a large scale, either the regional or international level,' said Mr Brian Halweil of the environmental research organisation Worldwatch Institute.

'All countries are tied enough to the world food markets that this is a global crisis.'

ASSOCIATED PRESS