GLOBAL food prices jumped six per cent last month, it emerged yesterday, sparking fears that governments could intervene in agricultural trade, stoking a food crisis like that of 2007-08.
The UN’s Food and Agriculture Organisation (FAO) said its food price index spiked between July and June, and urged authorities not to react by banning exports.
“There is an expectation that this time around we will not pursue bad policies and intervene in the market by restrictions, and if that doesn’t happen we will not see such a serious situation as 2007-08,” senior FAO economist Abdolreza Abbassian told Reuters.
Professor Douglas Southgate, an agricultural economist from Ohio State University, explained: “In late 2007 and the first half of 2008, Argentina, Vietnam, and 30 other nations curtailed exports, thereby contributing to the upward spiral in prices.”
The US government is also to blame for higher prices, Southgate told City A.M. “Converting more than one-third of the US corn crop into ethanol has far-reaching consequences.” Higher prices discouraged stock replenishing which makes corn more sensitive to price shocks, he added.