[Trusties] interesting article on global food supplies and prices

[timwinton]

http://groups.yahoo.com/group/roeoz/

UN Warns of Unrest as Food Prices Soar 
Posted by: "Mike Stasse" mstasse at yahoo.com   mstasse 
Tue Sep 11, 2007 12:23 am (PST) 

http://www.ft.com/cms/s/0/821913e0-5cdb-11dc-9cc9-0000779fd2ac.html
Financial Times
September 7, 2007

UN warns of unrest as food price inflation hits
developing countries

By Javier Blas in Rome

Developing countries face serious social unrest as they
struggle to cope with soaring food prices, the United
Nations' top agriculture official has warned.

Jacques Diouf, director-general of the UN's Food and
Agriculture Organisation, said surging prices for basic
food imports such as wheat, corn and milk had the
"potential for social tension, leading to social
reactions and eventually even political problems".

Mr Diouf said food prices would continue to increase
because of a mix of strong demand from developing
countries; a rising global population, more frequent
floods and droughts caused by climate change; and the
biofuel industry's appetite for grains.

"That combination of factors would most likely lead to
increases in food prices," Mr Diouf told the Financial
Times.

Signs were seen in Mexico this year where mass protests
were triggered by rising corn prices. Mr Diouf said
food represented about 10-20 per cent of consumer
spending in industrialised countries, but up to 65 per
cent in developing nations.

"If we continue to see an increase in their [food]
prices and in their import bill for food, there is a
serious potential situation," Mr Diouf said.

The warning comes as wheat prices are at a high,
forcing developing countries such as India and Egypt to
pay record prices for imports in what cereal traders
described as "panic buying" to beef up reserves.

Wheat prices this week rose to a record $8.86 a bushel
in Chicago, up about 60 per cent since January. Dairy
product prices have also set records, while other
commodities, such as corn and soyabeans, are trading
well above historical averages.

Mr Diouf said although the biofuel industry directly
increased the consumption of only a handful of
agricultural commodities, such as corn and rapeseed,
its effect spread to other food products because less
acreage was devoted to non-biofuel crops and the cost
of feeding livestock with grain was pushed up.

"The biofuel industry is a new factor creating demand
for food for a non-food use," he said.

Fears about the inflationary impact of biofuels on
global food prices have prompted Cargill, the world's
largest agricultural company by revenues, to question
the White House-led push for an increase in ethanol
production through tax subsidies.

Additional reporting byEoin Callan in Washington

Copyright The Financial Times Limited 2007
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