More flood devastation hits food stocks as prices increase

 
Julian Harris
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SRI LANKA has become the latest country to suffer devastating floods and a knock on effect on escalating food prices.

“Vegetables are already going up in price,” said minister Mahinda Amaraweera yesterday.

Over a million people have been displaced by the floods in the last nine days, which resulted from abnormally high monsoon rains.

The UN’s food price index reached an all-time peak last month, they announced earlier in the month.

Massive floods in Australia, covering an area the size of France and Germany, have heavily affected wheat prices.

Droughts and fires in Russia and Ukraine last year also damaged wheat crops, driving up prices.

The US government last week revised down its crop forecasts, causing a jump in corn and soya bean prices.

Corn production fell by 4.9 per cent last year, and faces a drop to its lowest level in 15 years.

The US is the source of up to half the corn trade in international markets.

Up to one third of corn grown in the US is now used to produce ethanol, according to Douglas Southgate, an agricultural economist from Ohio State University.

“A consequence of this reallocation is to hitch corn prices – and therefore the prices of meat, milk, and other edible goods made from corn and its close substitutes – firmly to oil prices,” Southgate said.

And rising oil prices have also been provoking concern, after prices almost jumped to $100 (£63) a barrel at the end of last week.

The hike caused the head of the International Energy Agency to describe prices as “alarming” yesterday.

“We are concerned about the speed of the rising oil price, which can harm the growth of economies,” said agency head Nobuo Tanaka.