Saturday, 15 January 2011

No need to panic about food prices... yet

FAO last week said its measure of global monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar in December hit its highest since records began in 1990.
Food prices are rising. According to the FAO (in an interview with Reuters), they are not yet at the level to cause severe concern because, unlike 2008, grain stocks have so far been sufficient to cushion the shock somewhat. The other reason not to panic is that the price rises have been far from universal - wheat is far more expensive but the price of rice, for example, has fallen, suggesting that some of the price-rises are falling more on the luxury/wealthier-nation-staples than on the very-poor side. 

This does not, of course, make things any easier for Algeria, for example, where food prices have now been reduced (by reducing taxes) after 800 people were injured in riots. Or Jordan, where 5000 people participated in 'day of rage' protests about unemployment and rising food costs. It is all very well for international organisations like the FAO to say that the situation globally is not at its worst but this does not change the fact that the lived experience on the ground in many countries is very different. 

And sometimes, dealing with the reality on the ground will require 'radical' (or at least a little unorthodox) moves, such as intervening in markets. As Duncan Green points out, some of these moves, as much as they might upset free market fundamentalists supporters like the World Bank, may be (at least) necessary as temporary measures to ensure that people have food. 

I hope the FAO is right but the lean season between harvests begins in places like Sudan and Niger in a month or two and while reserve may exist globally, nowhere near enough of these reserves are available to these particular countries to prevent the riots and violence that happen when people don't get fed. 

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