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G20 to tackle food prices as countries reassure

08 January 2011 02:25 (UTC +04:00)

Baku â€“ APA. The Group of 20 leading economies have started working-level talks on the soaring food prices that are stoking fears of a repeat of the 2008 food crisis, APA reports quoting â€œReutersâ€.
Global food prices hit a record high last month, outstripping the levels that sparked riots in several countries in 2008, and key grains could rise further, the United Nations’ food agency said this week.
Policymakers’ major concern is that, if unchecked, rising food prices could stoke inflation, protectionism and unrest.
Hundreds of youths clashed with police in several Algerian cities including the capital on Thursday over food prices and unemployment, residents said.
Rising food prices could also set back the recovery from the financial crisis by eroding consumers’ disposable budgets in the fast-growing emerging economies that are leading the revival.
Rhee Chang-yong, who represents South Korea at the G20, said working group talks were under way in the G20 with the aim of improving global cooperation to resolve food security problems ahead of a summit hosted by France.
"France is emphasizing food security. As a former host country of G20, we would like to deal with the price volatility problem thoroughly," Rhee said.
French President Nicolas Sarkozy has asked the World Bank to conduct urgent research on the impact of food prices, a source familiar with the matter said.
CEREAL PRICES UP IN 2010
Last year, wheat futures prices rose 47 percent, buoyed by bad weather including drought in Russia and its Black Sea neighbours. U.S. corn rose more than 50 percent and U.S. soybeans jumped 34 percent.
The U.N. Food and Agriculture Organization said in a report on Wednesday that sugar and meat prices were at their highest since its records began in 1990. For wheat, rice, corn and other cereals, prices were at their highest since the 2008 crisis.
During that crisis, riots broke out in countries from Egypt to Haiti. Import prices jumped, forcing many countries’ trade balances into a deep and costly deficit and several governments in Asia imposed export restrictions on rice.
The U.N.’s World Food Program (WFP), which was feeding some 100 million people last year, noted that cereals including rice had not hit 2008 price peaks, but that sugar and cooking oil were pushing up the food index.
"We’re ready to step up assistance specifically to countries that are vulnerable to these high prices, especially focusing also on risks to children," WFP spokeswoman Emilia Casella told a news briefing in Geneva.
She said a fairly good harvest in a number of African countries in the past year had helped, and that reserves were higher than in the 2008 crisis while fuel prices, which affect fertilizer and the transport of food, were lower.
Robert Prior-Wandesforde, an economist at Credit Suisse in Singapore, said food commodity prices were unlikely to rise much further, barring weather catastrophes.
"The estimated global and exporting countries’ stock-to-use ratios of both wheat and rice are considerably higher today than in 2007-08, making shortages and drastic export bans unlikely," he said in a report.
But the London-based venture capital firm Emergent Asset Management, which holds swathes of land across southern Africa, still sees much more mileage in food prices.
"The world is still in denial about food prices," its chief investment officer, David Murran, told Reuters.
"If you look at demographics, if you look at production, if you look at the impact of climate change, then we are only at the beginning of this."
CHILLIS, RICE AND ONIONS
Many countries in Asia, including India and China, have seen food inflation jump to double digit levels. China has imposed price controls to try to ensure stable prices for consumers. On Friday, Ethiopia announced similar measures.
Thailand, the world’s biggest rice exporter, sought to reassure the market, with Commerce Minister Porntiva Nakasai telling reporters it would maintain 2011 exports at 9 to 9.5 million tones after shipping 9 million in 2010.
The Philippines, the world’s biggest buyer of rice, said it would cut its 2011 imports by at least half, compared with record purchases in 2010, further easing concerns of a tight rice market this year.
Still, the head of the National Food Authority, which overseas rice imports, said it might increase its buffer stock to cover a minimum 40 days of demand, from 30 now.
A senior food official in Bangladesh said it was worried about food security and had imported 250,000 tones of rice from Vietnam.
In Indonesia, which has the world’s fourth-largest population, a fivefold rise in the price of chilies in the past year has helped drive overall inflation to near 7 percent.
Farmers are operating around-the-clock patrols to protect their chili plants and President Susilo Bambang Yudhoyono has urged households to plant chilies in their gardens.
In India, where onion prices have triggered protests in the past, prices have jumped after weather damaged the crop and officials have opened talks with Pakistan about resuming imports.