(Corrects age of minister in third paragraph. The story ran on Feb. 10.)
Feb. 10 (Bloomberg) -- Bolivia may tap its record $10 billion in central bank reserves to help boost agricultural production and stockpile food staples as a hedge against a looming global “food crisis,” Finance Minister Luis Arce said.
President Evo Morales canceled his participation at an event in the mining city of Oruro today after protests against sugar shortages and rising transport prices threatened to turn violent, state-run news agency ABI reported today. Bolivian consumer prices accelerated 1.76 percent in December from November, the biggest monthly jump since May 2008.
Accelerating inflation caused by rising food prices is becoming a global problem, Arce, 47, said in an interview today in La Paz. China announced today that it will spend 12.9 billion yuan ($1.96 billion) to bolster grain production and fight drought. North African grain shipments from France’s main grain terminal jumped the most in 10 weeks as countries in the region boost stockpiles amid widening political protests.
“The Bolivian state for the first time will produce food in order to stock it,” Arce said today. “We are looking at a food crisis that is coming.”
Bolivia’s central bank reserves should be used to increase loans to producers and lower prices, Arce said. The government also plans to create a state-run company to store wheat, corn, soybeans and rice, he said.
Annual inflation in Bolivia reached 7.18 percent last year, exceeding a July forecast by the country’s central bank that prices would rise 3 percent to 5 percent in 2010 compared with a 0.26 percent increase in 2009.
French Agricultural Minister Bruno Le Mair said Feb. 4 that the world faces a “real risk” of a food crisis as agriculture-commodity prices climb, increasing the likelihood of riots in developing countries.
Corn prices rallied to a 30-month high for a second day today on signs of increasing global demand for supplies from the U.S., the world’s biggest grower and exporter. Sugar prices jumped the most in a week while wheat hoarding may become “widespread” as production trails demand, Abdolreza Abbassian, a senior economist at the UN Food and Agriculture Organization, said in an interview by phone from Rome.
The U.S. State Department estimates there were more than 60 food riots worldwide from 2007 to 2009, when food costs hit record highs.
Bolivia’s central bank reserves surpass the $7 billion the country needs and will be used to increase agricultural production, start lithium mining projects and invest in energy, Arce said.
“We have land,” Arce said. “We think that we can use part of the reserves, but only for production projects, like food, energy, electricity and lithium.”
To contact the reporter on this story: Sara Shahriari in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Joshua Goodman at email@example.com