Price controls, tariff reductions and export restrictions have done little to offset dwindling reserves of rice and wheat around the world, according to a UN report released Friday.
'People are dying because of their reaction to the situation. People will not be sitting dying of starvation, they will react.' —Jacques Diouf, Food and Agriculture Organization
According to the Rome-based Food and Agriculture Organization, strong cereal demand in the last two months has driven up prices significantly. By the end of March, wheat and rice prices had doubled from the previous year. Maize prices jumped by one-third, according to the report.
"All indications we have is that this is not a short-term effect … where the first year you have price increases and the following year there is an increase of supply that brings the prices down," FAO director general Jacques Diouf said at a news conference.
Protesters riot in Cameroon, Egypt, Haiti
Within the past month, rising food prices have sparked riots in Cameroon, Ivory Coast, Ethiopia, the Philippines and Haiti. The UN noted troops in Pakistan and Thailand were deployed to guard against theft from farm fields and warehouses. In Egypt this week, where prices of cooking oil and rice have doubled since January, thousands of protesters took to the streets. One person died in the two days of rioting.
"People are dying because of their reaction to the situation. People will not be sitting dying of starvation, they will react," Diouf said.
The Crop Prospects and Food Situation report estimates that world cereal production in 2008 will rise 2.6 per cent to 2,164 million tonnes. Meeting projected targets would relieve the current food shortage, though the UN agency says the outlook is precarious.
"Any major shortfalls resulting from unfavourable weather, particularly in exporting countries, would prolong the current tight market situation; contribute to more price rallies and exacerbate the economic hardship already facing many countries," the report said.
Wheat production in Canada to rise 11%
The report said wheat production in Canada is expected to increase 11 per cent in 2008 over the previous year, owing to wheat's lucrative status.
"Current high wheat prices are expected to be a strong incentive to recovery in the wheat area," the report said.
"However, rather than reversing last year's shift, a further expansion on 2007's already relatively high oilseeds area is also expected because of attractive returns in this sector."
The UN report noted food inflation is hardest on developing countries where food represents as much as 60 to 80 per cent of consumer spending. By comparison, food accounts for 10 to 20 per cent of consumer spending in industrialized countries.