Food prices soar to new high

 
Julian Harris
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FOOD prices have surged above the peak they reached during the 2008 crisis, the United Nations (UN) revealed yesterday.

The 2008 food crisis provoked food riots, the toppling of at least one government, and plunged over a billion people into hunger.

And the UN’s food price index averaged 214.7 last month, a record high that surpassed the 213.5 mark of June 2008 when prices jumped to a 30-year peak.

The index measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar.

“I am feeling less optimistic than I was in November – we have not had much good news,” said Abdolreza Abbassian of the UN’s Food and Agricultural Organisation (FAO).

Nobel economics laureate Gary Becker has estimated that a 30 per cent rise in food prices over five years would cause a 20 per cent fall in living standards in poor countries.

And the FAO estimated that domestic staple food prices in developing countries increased by 48 per cent in real terms during the 2008 food crisis.

While Abbassian does not expect a repeat of the 2008 riots, he fears high prices could be here to stay. “High prices are not going to go away and there is a strong possibility that they might remain high for two years,” he said.

Sugar, cereal and oil and fat prices experienced the sharpest jumps. Sugar and cereals both rose by 6.7 per cent in the index from November to December.

Extreme weather conditions and the surge in oil prices are partly behind the rise in the food index. Recent floods in Australia, which have covered an area the size of France and Germany, have hit the supply of wheat.

And earlier in the year droughts and fires in Russia and Ukraine, also top wheat producers, harmed supply, pushing up prices. In September the supply was damaged further after the Russian government banned wheat exports.