Experts tell world to brace for higher food prices, crisis
2012-08-20 16:49:47
With drought parching farms in the United States and near the Black Sea, weak monsoon rains in India and insidious hunger in Africa's Sahel region, the world could be headed toward another food crisis.
Asia should keep a catastrophe at bay with a strong rice harvest while the G-20 group of industrialized and emerging economies tries to parry the main threat, soaring food prices.
“We have had quite a few climate events this year that will lead to very poor harvests, notably in the United States with corn or in Russia with soja,” warned Philippe Pinta of the French farmers' federation FNSEA.
“That will create price pressures similar to what we saw in 2007-2008,” he added in reference to the last global food alert, when wheat and rice prices nearly doubled.
In India, “all eyes will be on food inflation — whether the impact of a weak monsoon feeds into food prices,” Samiran Chakraborty, regional head of research at Standard Chartered Bank was quoted by Dow Jones Newswires as saying.
Monsoon rains were 15.2 percent below average in mid-August, according to latest data from India weather bureau, and Asian rice prices are forecast to rise by as much as 10 percent in the coming months as supplies tighten.
India and Thailand are two of Asia's leading rice exporters.
Indian Food Minister Kuruppasserry Varkey Thomas told parliament this month that prevailing conditions “could affect the crop prospects and may have an impact on prices of essential commodities.”
Despite that warning however, the U.N. Food and Agricultural Organization expects rice output to slightly surpass “excellent results” recorded last year, though the FAO cut its global forecast for production of unmilled rice to about 725 million tons from its previous figure of 732 million.
The world is feeling the onset of the El Nino weather phenomenon, which has a natural warming effect, is active in the western Pacific and expected to last until winter in the northern hemisphere, according to Japanese meteorologists.
The U.S. farm belt has been ravaged by the most stifling drought since the 1950s, and the country's contiguous 48 states have just sweltered through the hottest July on record.
Corn production is probably at the lowest level in six years, the U.S. Department of Agriculture said, and curtailed production will likely send corn and soybean prices to record highs, it added.
“Cereal prices have shot up, with an increase in (corn) prices of almost 40 percent since June 1,” strategists at the CM-CIC brokerage noted.
Commerzbank commodity experts said high temperatures and drought around the Black Sea “have resulted in wheat crop shortfalls on a scale that cannot yet be predicted with any accuracy.”
U.S. commodities analyst, AgResource Company President Dan Basse told the Australian Broadcasting Corporation last week that the Australian harvest could play a role in easing the food shortage.