Global Food Supplies Stretched to Limit
January 14th, 2011Via: MSNBC:
Strained by rising demand and battered by bad weather, the global food supply chain is stretched to the limit, sending prices soaring and sparking concerns about a repeat of food riots last seen three years ago.
Signs of the strain can be found from Australia to Argentina, Canada to Russia.
On Thursday, Tunisia’s president ordered prices on food staples slashed and indicated he won’t run for re-election after deadly riots hit the North African country.
“We are entering a danger territory,” Abdolreza Abbassian, chief economist at the U.N.’s Food and Agriculture Organization (FAO), said last week.
The U.N.’s fear is that the latest run-up in food prices could spark a repeat of the deadly food riots that broke out in 2008 in Haiti, Kenya and Somalia. That price spike was relatively short-lived. But Abbassian said the latest surge in food stuffs may be more sustained.
“Situations have changed. The supply/demand structures have changed,” Abbassian told the Australian Broadcasting Corp. last week. “Certainly the kind of weather developments we have seen makes us worry a little bit more that it may last much, much longer. Are we prepared for it? Really this is the question.”
Price for grains and other farm products began rising last fall after poor harvests in Canada, Russia and Ukraine tightened global supplies. More recently, hot, dry weather in South America has cut production in Argentina, a major soybean exporter. This month’s flooding in Australia wiped out much of that countries wheat crop.
As supplies tighten, prices surge. Earlier this month, the FAO said its food price index jumped 32 percent in the second half of 2010, soaring past the previous record set in 2008.
Research Credit: V
