The World's Growing Food-Price Crisis

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AFP / Getty

People push to receive food distributed by the Kenyan Red Cross in the Mathare slum in Nairobi.

Add this to the list of items that could seriously threaten world peace: food.

Rocketing food prices — some of which have more than doubled in two years — have sparked riots in numerous countries recently. Millions are reeling from sticker shock and governments are scrambling to staunch a fast-moving crisis before it spins out of control. From Mexico to Pakistan, protests have turned violent. Rioters tore through three cities in the West African nation of Burkina Faso last month, burning government buildings and looting stores. Days later in Cameroon, a taxi drivers' strike over fuel prices mutated into a massive protest about food prices, leaving around 20 people dead. Similar protests exploded in Senegal and Mauritania late last year. And Indian protesters burned hundreds of food-ration stores in West Bengal last October, accusing the owners of selling government-subsidized food on the lucrative black market. "This is a serious security issue," says Joachim von Braun, director-general of the International Food Policy Research Institute (IFPRI), in Washington. In recent weeks, he notes, he has been bombarded by calls from officials around the world, all asking one question: How long will the crisis last?

The forecast is grim. Governments might quell the protests, but bringing down food prices could take at least a decade, food analysts say. One reason: billions of people are buying ever-greater quantities of food — especially in booming China and India, where many have stopped growing their own food and now have the cash to buy a lot more of it. Increasing meat consumption, for example, has helped drive up demand for grain, and with it the price.

There are other problems too. The spike in oil prices, which hit $103 per barrel in recent days, has pushed up fertilizer prices, as well as the cost of trucking food from farms to local markets and shipping it abroad. Then there is climate change. Harvests have been seriously disrupted by freak weather, including prolonged droughts in Australia and southern Africa, floods in West Africa, and this past winter's deep frost in China and record-breaking warmth in northern Europe.

The push to produce biofuels as an alternative to hydrocarbons is further straining food supplies, especially in the U.S., where generous subsidies for ethanol have lured thousands of farmers away from growing crops for food. "The area used for biofuels is increasing each year," says Nik Bienkowski, head of research at ETF Securities, a commodities-trading firm in London. To make matters worse, global stockpiles of some basics have dwindled to their lowest point in decades. Rice — a staple for billions of Asians — has soared to its highest price in 20 years, while supplies are at their lowest level since the early 1980s, according to the U.S. Department of Agriculture. Meanwhile, the global supply of wheat is lower than it's been in about 50 years — just five weeks' worth of world consumption is on hand, according to the U.N. Food and Agricultural Organization.

As always in a crisis, there are winners. The creeping fear that the world might actually run short of food — no longer simply the stuff of sci-fi movies — has led speculators to pour billions into commodities, further accelerating price rises. In a single day in February, global wheat prices jumped 25% after Kazakhstan's government announced plans to restrict exports of its giant wheat crop for fear that its own citizens might go hungry. Jittery officials in India and Egypt are also restricting food exports. "Prices have risen at a much faster rate in the last few months," says Fazlul Kader in Dhaka, Bangladesh, where he coordinates rural projects for the U.N.'s International Fund for Agricultural Development; there, soybean oil alone has shot up 60% in a year.

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