Skyrocketing Food Prices Threaten Global Security

PARIS, France, February 18, 2011 (ENS) – As G-20 finance ministers met in Paris today, warnings that food riots could erupt in the face of steeply rising prices are resounding around the world. Members of the European Parliament called on the G-20 to take action. Many leaders are identifying extreme weather patterns and climate change as primary factors in poor crop yields.

“Global agricultural production is coming up against the increasingly apparent effects of climate change, increasingly severe climate disruptions which require more efficient production and which lead to instability in agricultural production,” France’s Agriculture Minister Bruno LeMaire told the United Nations General Assembly in a closed-door session Thursday.

French Agriculture Minister Bruno LeMaire, left, with UN chief Ban Ki-moon, February 17, 2011 (Photo by Eskinder Debebe courtesy UN)

Food prices in 2011 are higher than at any time since the UN Food and Agriculture Organization started recording them in 1990, the agency announced at the beginning of February.

In the pressure cooker of soaring prices, food has become a global security issue.

“Today’s economic and agricultural situation is perilous. It faces much greater volatility than all of the other economic sectors in the world without exception,” said LeMaire.

“Global food prices are now at dangerous levels,” warned World Bank President Robert Zoellick ahead of the annual meeting of the Group of Twenty, G-20, finance ministers and central bank governors that opened today in Paris.

Street child at a charity feeding center, Philippines, December 11, 2010 (Photo by Chris Lobregas)

“While not the primary cause for the political instability we see today in the Middle East, rising prices have nevertheless been an aggravating factor that could become more serious,” Zoellick said, recalling the food riots of 2008. “Food security is now a global security issue.”

The World Bank estimates that recent food price hikes have pushed about 44 million people into extreme poverty, living on less than US$1.25 a day.

“I feel we have now entered a danger zone,” said World Bank Managing Director Ngozi Okonjo-Iweala of Nigeria. “National food security issues are becoming a global food security issue. This is a challenge for the world. Almost one billion people are going to bed hungry.”

“An unfortunate combination of weather shocks in various large wheat producing countries, followed, in some cases, by export bans, has curbed supplies of wheat and has caused prices to more than double between the lows of June last year to January of this year,” said Zoellick, a former U.S. Trade Representative.

Wheatfield ruined in floods, Queensland, Australia, December 2010 (Photo by lizardwatcher)

The cost of wheat is continuing to rise, largely due to drought and fires in Russia in 2010, floods in Australia, said the UN. Wheat prices are still below the peak of the 2008 food price crisis, but if current trends continue, they will reach these levels, many agencies predict. Oil prices have also passed $100 a barrel, the point where using maize for biofuel production becomes much more viable.

France now holds the rotating presidency of the G20 and President Nicholas Sarkozy has decided to include the issue of agriculture in general, and the issue relating to the volatility of commodity prices in particular, on the agenda of its G20 presidency.

LeMaire told the General Assembly, “I am very serious about this: the issue of global food security is not a G20 issue; it’s an issue that involves everyone, that concerns all of us. We have a moral responsibility to find solutions that we haven’t been able to find for years now. We have a moral responsibility not to leave dozens of developing countries throughout the world to face the food crises alone.”

In Strasbourg, France, the European Parliament today adopted resolution calling on the European Commission “to increase investment in farming and food security” and to “take the necessary steps to fight against the excesses of speculation on commodity markets.”

Food riot in Somalia, May 6, 2008 (Photo credit unknown)

Members of the European Parliament also called on the G-20 to take action.

“Anger over soaring food prices has literally put a number of countries on fire. A crucial cause has been speculation by traders and brokers who have no commercial interest in these markets,” said MEP Hannes Swoboda of Austria, a vice president of the Group of the Progressive Alliance of Socialists & Democrats.

Said S&D spokesman on economic and monetary affairs Udo Bullmann of Germany, “The G-20 should work on regulation specifically designed to tackle the food and agricultural crisis. This work should involve countries that are not part of the G-20.”

“Speculators should not have access to food and agricultural commodity markets,” Bullmann said. “We also need to urgently set up a preventive mechanism against excessive fluctuations of price at international level.”

Record high food prices are putting added pressure on the United Nations agency that helps feed nearly 100 million of the world’s poorest people, with officials warning of a combination of soaring costs, weather emergencies and political instability.

WFP provided food to 7.5 million people affected by the floods in Pakistan, such as this father and son in Punjab. (Photo by Martin Penner courtesy WFP)

“We are on red alert and we are continually assessing needs and reassessing plans and stand ready to assist,” said UN World Food Programme Executive Director Josette Sheeran of the United States. “Rising food prices are a reality for the whole world, but they have the biggest impact on the poorest and most vulnerable populations.”

If prices continue to rise, due in part to adverse weather such as floods, droughts and fires, or even stay at the same high levels for the rest of the year, WFP will face a serious budget gap, said Sheeran.

WFP’s forward purchase of food while market prices were relatively low in 2010 has helped to minimize the impact, said Sheeran, but every 10 percent increase in the price of its food basket, costs an additional $200 million a year to buy the same amount of food.

Beyond the near doubling of wheat prices, maize is 73 percent higher, but crucially for many of the world’s poor, rice prices have increased at a slower rate than other grains. Sugar and edible oils have gone up sharply.

Prices for other food items essential for dietary diversity, such as vegetables in India and China, and beans in some African countries, have also risen.

Sheeran said the WFP is developing an action plan for early purchasing and setting up reserves and safety nets in an attempt to avoid the kinds of painful decisions it faced during the food price crisis of 2008 – reducing rations and decreasing the number of beneficiaries.