Business | Markets
High food prices likely to persist
Global food prices, which have rocketed in recent weeks, are likely to stay high, a senior UN official says.
- By Andrew Shouler, Deputy Managing Editor, and Jumana Al Tamimi, GCC & Middle East Editor
- Published: 00:15 April 17, 2008
- Image Credit: Reuters
- A soldier keeps watch as people buy government subsidised rice in Manila. Food security has become a major concern in many countries in recent weeks.
Dubai: Global food prices, which have rocketed in recent weeks, are likely to stay high, if not quite so high as now, a senior UN official said on Wednesday.
Abdel Reza Abbassian, Secretary of the Inter-Governmenal group on grain at Rome-based FAO (Food and Agricultural Organisation of the UN) told Gulf News, "The good news is that prices won't go up further, [but] remain below the current high levels. The bad news is that we [still] have to get used to high prices."
It's a message that will strike fear in the poorer regions of the world, many parts of which have already seen disturbances, as panic spreads over shortages, climbing costs and ultimately hunger.
This surge has resulted from a "perfect storm of several factors coming at once", according to Heba Qandil, Cairo-based Regional Public Relations Officer of the World Food Programme of the UN.
These include greater demand while supply is dwindling in the emerging big economies of China and India, the increased use of land for biofuels, climate change and failed harvests, high oil prices, and increasing transport costs.
But it is an escalation which has also been driven by financial excess. "The financial market generated liquidity, and it has been looking for investments," said Abbassian of the FAO.
For Asian consumers rice particularly is a staple commodity. Rampaging costs have already imposed tremendous strain on societies, and some governments have intervened to prevent exports and preserve reserves at home. Prices have doubled in one month, and nearly trebled in the past quarter.
Yet tracking rice prices is not so easy, with so many varieties. Unlike other commodities, it does not have a recognised international benchmark.
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