International prices of grain, sugar, meat and edible oil are at an all-time high according to the United Nations Food and Agricultural Organisation (FAO).
The organisation went on to warn that this could lead to social and political unrest in low-income countries that have to buy their food on international markets. This happened the last time commodity prices spiked and put basic essentials out of the reach of the poor, in 2008.
Also, if increased food costs drive up inflation in countries, they will be forced to hike interest rates to limit general price increases in the economy. However, by reducing demand, interest rates hikes will damage overall growth, at a time when many countries are still struggling to recover from the global economic slowdown. Consumers' discretionary spending will also be reduced if they are forced to spend more on food.
Food security is an increasing international concern as growing populations and emerging wealth in many countries lead to increasing demand. But, it is essential the countries do not resort to protectionist measures and limit the export of food commodities or attempt to artificially control prices or start building unsustainable stockpiles. In the long run, it is only the free market and free trade that will ensure that enough food is produced and reaches the markets where they are needed. Price increases in commodities like rice and wheat, for example, have been limited compared to 2008 because of better supply. The global situation might improve in the coming months if good crops are produced in exporting countries.
International support programmes to promote agriculture and food security in the most vulnerable countries are also necessary to prevent shortages and price hikes that could harm the poor. While food is often treated as a commodity, access to good nutrition is a basic human right that the international community must promote and protect in all countries.
