Countries in Latin America and Africa, including Bolivia and Mozambique, are most at risk of food riots as prices advance, the United Nations reported.
The past month’s protests in North Africa and the Middle East were partly linked to agriculture costs. World food prices climbed to a record in January, the UN said on Feb. 3. Food prices are rising to “dangerous levels and threaten tens of millions of poor people” globally, World Bank President Robert Zoellick said yesterday.
“The low-income food deficit countries are on the front line of the current surge in world prices,” Abdolreza Abbassian, a senior economist at the UN Food and Agriculture Organization in Rome, said in an e-mail Feb. 14. Other countries where expensive food imports may become a “major burden” include Uganda, Mali, Niger and Somalia in Africa, Kyrgyzstan and Tajikistan in Asia and Honduras, Guatemala, and Haiti in Latin America, he said.
Wheat traded at a record in Zhengzhou, China on Feb. 14 and the grain, corn and soybeans rallied to the highest levels in 2 1/2 years in Chicago the past week. Governments from Beijing to Belgrade are raising imports, limiting exports or releasing supply from stockpiles to curb inflation.
Higher prices of wheat, rice, sugar and dairy products helped push the FAO’s Food Price Index to a record last month. Protests in North Africa have driven Tunisia’s President Zine El Abidine Ben Ali into exile after 23 years in power and forced Hosni Mubarak to resign as Egypt’s president and hand power to the army.
North Africa is “still vulnerable, even more so than before as situations are uncertain and domestic price stability depends on the good functioning and continuation of subsidy programs, such as in Egypt,” Abbassian said in response to the question on which countries are most at risk of food riots.
The world faces a “real risk” of a food crisis as agriculture-commodity prices climb, increasing the likelihood of riots in developing countries, French Agricultural Minister Bruno Le Maire said earlier this month. Rising prices have pushed 44 million more people into “extreme” poverty in developing countries since June, the World Bank estimates.
Food prices are going higher because there is competition for limited arable land to boost supplies, said Jeff Currie, global head of commodities research at Goldman Sachs Group Inc. in London.
“Each time there were food price spikes in the last decade, there would be rotation from one crop to the next, meaning you would go from a bull market in one crop to the next crop each year,” Currie said in an interview yesterday. “What is different this time is that there is less capability to rotate land because strong demand is exhausting total arable land.”
Higher food costs helped provoke deadly riots this year in countries including Algeria, and at least 13 people died in Mozambique last year in protests against plans to increase bread prices. The U.S. State Department estimates there were more than 60 food riots worldwide from 2007 to 2009.
Global wheat harvests may trail demand for a second year, spurring “widespread” hoarding and further price gains, Abbassian said last week. Wheat production needs to increase at least 3 percent to 4 percent, he said then.
Global wheat production will probably drop 4.3 percent to 653 million metric tons in 2010-2011 from the previous year, while demand may expand 1.2 percent to 667 million tons, the FAO said in December. The U.S. Department of Agriculture estimates output at 645.4 million tons and demand at 665.2 million tons.
“The world needs wheat production in the 690 level next year or things shall truly become tight,” Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, said on Feb. 14. “Stronger economies take greater sums of grain to meet rising demand or prices shall have to rise to ration supplies.”
About 42 percent of the total area planted with wheat in China’s eight major producing provinces has been hurt by a dry spell that may last into the spring, Minister of Agriculture Han Changfu said Feb. 9. China is the largest wheat consumer, representing about 17 percent of global use in the year to June 30, according to data from the London-based International Grains Council.
Prices gained after drought slashed Russian production, floods eroded crops in Australia and Canada and dry weather threatened U.S. output.
Wheat reached $9.1675 a bushel on the Chicago Board of Trade on Feb. 14, the highest price since August 2008 for a most-active contract, and has surged 76 percent the past year. That compares with an 88 percent gain for corn and a 47 percent increase for soybeans.
The crisis is global. Bolivia will tap central bank reserves to spur agricultural production and stockpile food, Finance Minister Luis Arce said on Feb. 10. Protests over sugar shortages and rising transport costs prompted President Evo Morales to cancel his participation at an event in the mining city of Oruro last week. Faster inflation caused by rising food prices is becoming a global problem, Arce said.
Still, higher food prices will prompt increased investment in agriculture research, development and infrastructure, Cargill Inc. Senior Vice President Paul Conway said yesterday at a conference in Birmingham, England. Improved technology and investments to attract young people into agriculture will enhance yields and help the world’s farmers feed a population that’s expected by the U.K. government to rise to 8 billion by 2030, he said.