World Food Prices: What the news served up in May

2 June, 2011 by (comments)

The last month was a busy one for those of you following world food prices. Here’s a quick overview in case you missed anything:

Oxfam predicted that world food prices will increase by between 120% and 180% by 2030, in their Growing a better future report, released this week. This will mainly be the result of crop yields not keeping up with population growth, as the impacts of climate change become even more omnipresent, the report says.

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Earlier in May, the FAO published the food price indices for April, which showed a 71% increase on cereals in the last 12 months, predominantly driven by extreme weather and planting delays in Europe, China, the United States, and Australia. However, this spike in grains was offset by declines in dairy, sugar and rice, leaving the overall index virtually unchanged from March 2011.

However, according to the World Bank, this trend of steep rising prices over the last 12 months has pushed some 44 million people below the poverty line.

The Russian prime minister announced this week that they will lift the export ban on wheat as of 1 July, helping to alleviate the global grain supply squeeze which will be under further pressure in the coming months due to recent severe drought in northern Europe and China and intense rain and tornadoes in the US.

Economic instability and rising food prices contributed to social unrest and protest in the Middle East at the beginning of the year and more recently in Kenya, Uganda, Burkina Faso, Georgia, Yemen as well as in China.

What is driving the rise in food prices which are leading to so much turmoil throughout the world? Higher fuel prices? Extreme weather? Land grabs and biofuel production? Or is it purely the economics of the commodity markets?

Leave a comment and tell us what you think.

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