For Indian consumers reeling under high food prices, it might be small comfort that the rest of the world too is sharing the problem in varying degrees. In Algeria and a few other North African countries, riots have occurred over high food prices, although other factors such as the high levels of unemployment also contributed to the unrest. According to the Food and Agriculture Organisation (FAO), food prices hit a record high in December 2010, surpassing the levels touched in 2007-08, when food riots occurred in countries as far apart as Haiti and Bangladesh. The FAO's food price index, which tracks the wholesale prices of commodities such as wheat, rice, corn, oil seeds, dairy products, and meat rose to 214.7 per cent in December. The previous peak was 213.5, reached in June 2008. The FAO has said that the increase does not constitute a crisis, but admitted that the situation was “alarming”. The near-term outlook for food prices too is gloomy.
The rise in the food price index is attributed to an increase in the prices of sugar, oil seeds and meat. Sugar prices recently reached a 30-year high. While some comfort can be derived from the fact that the prices of rice have remained relatively stable, wheat prices are set to rise on the back of poor harvests in some major producing regions. As in India, high food prices are driving inflation beyond the comfort levels of central banks in many other countries. Also, macroeconomic management has become more complex as the price rise has been particularly sharp in the case of commodities such as vegetables, milk, and meat, which are increasingly preferred by consumers over cereals. Even as it seems certain that the global food imports by countries facing shortages will hit a record high in 2011, the policymakers in many countries are forced to adopt short-term measures such as banning exports of critical food items. At another level, the high agricultural prices are a further disincentive to conclude the Doha round of trade talks. Large agricultural exporters such as Brazil and Argentina that stand to gain enormously appear much less interested. Yet a globally coordinated strategy is necessary not only for furthering multilateral trade but also in areas such as checking the unbridled financialisation of commodities markets and encouraging speculation.
