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World Food Prices Hit New High

World Food Prices Hit New High - The UN’s Food and Agriculture Organization (FAO) has raised the alarm on the potential danger of a “food price shock”, specially for the poor people in developing countries. The FAO has announced that its food price index… a basket tracking the wholesale cost of staple commodities like rice, wheat, corn, vegetable oils, dairy products, sugar and meats — jumped to 214.7 points, above the peak of 213.5 set in June 2008.

Abdolreza Abbassian, senior economist at the FAO in Rome told the Financial Times that the prices of agricultural commodities are likely to rise further. “It will be foolish to assume that this is the peak,” he said.

Even before the warning, many countries including China are already struggling with rising food prices. It has become such a political challenge so that in the case of China, taming inflation has become a top priority, even if it means having to move up the value of the yuan against the dollar faster than usual.

World Food Prices Hit New High

“The world faces a food price shock,” the FAO economist told the Financial Times, even as he warned that the spike could lead, “if prolonged several months, to a food crisis.” Food commodity traders are reported to be worried that prices could rise further due to weather conditions.

The La Niña weather phenomenon, now causing drought in key growing areas of Argentina, Brazil and the US may intensify. The same phenomenon causes an abundance of rain in our part of the world as in the extensive flooding now being experienced in Northern Australia and in some areas of the country like Bicol and parts of Mindanao.

According to Businessweek, there is an added pressure on food prices: recovering economies. Ephraim Leibtag, US Agriculture Dept. food price forecaster told BusinessWeek: “Increased global trade coming out of the recession, some increased consumer demand, and higher energy and commodity costs for food production” will boost prices. The USDA expects a rise in oil prices to lift demand for ethanol by 5.1 percent in the U.S., which will affect corn prices. The agency foresees U.S. food inflation of 2 percent to 3 percent, the highest since 2008.

World Food Prices Hit New High

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