Food Price Watch: Riots in Algeria; Mexican Government Buys Maize Futures
Sugar, meat, and cereal prices reach record levels as economists warn of global food riots by Easter.
On Wednesday, we told you that world food price levels had entered "danger territory," according to the United Nations Food and Agriculture Organization. The cost of a basket of sugar, grain, and oilseed reached a new high in December, surpassing previous records set in 2008.
In the announcement, two days ago, FAO economist Abdolreza Abbassian was careful to downplay fears that high prices could once again spark food riots, as they did in 2008. However, yesterday brought news of rioters in Algeria chanting "Bring us sugar" while setting fire to tires and smashing street lamps. Simultaneously, the Mexican government invested heavily in maize futures in order to stabilize prices through the third quarter of 2011, in response to the threat of industrial action by the powerful National Union of Millers and Tortilla Makers.
And there is no shortage of doomsayers, predicting worse to come. Even the otherwise sanguine Abbassian told The Guardian that:
There is still room for prices to go up much higher, if for example the dry conditions in Argentina tend to become a drought, and if we start having problems with winterkill in the northern hemisphere for the wheat crops.
Philippe Chalmin, economic adviser to the French government, went further, predicting riots by Easter based on last summer's poor wheat harvest in Russia and the current flooding in Australia, the world's fourth-largest wheat exporter:
For the cereals, I expect very strong tension around March, April. There are no more stocks available with the large exporters.
In its agricultural predictions for 2011, The Economist warned readers to watch for:
Runaway food-price inflation. Dizzying spikes in wheat, coffee and other commodities have rekindled fears of a food-price spiral like the one in 2007-08. Short-term supply-side shocks will push prices suddenly higher.
The United States is a major global supplier of both wheat and maize, and the USDA is predicting a banner year for cereal exports ($9.8 billion and $12.3 billion respectively). However, in many other parts of the world, it seems as though 2011 is going to be a year of hunger and unrest. We'll be watching this story in the coming months, and exploring some of the underlying causes, as well as anything you can do to help.
Photo of food riots in Algeria via Passport, the Foreign Policy editors' blog.