The knock-on of rising food prices, which rose about 25 percent in 2010 according to the FAO, has been and will be rapid. In a February 15, 2011 statement, World Bank president Robert Zoellick estimated that an additional 44 million people worldwide have been pushed into extreme poverty because of the rising cost of eating in the 8 months since July 2010. While all the food grains outside rice, and all the oilseeds providing vegetable oils and animal feeds have strongly risen in price, sugar prices have also soared. In a predictable short-term future and intensified by rising oil prices meat, fish, milk and dairy product prices will all rise.
In a major change from “laisser faire” policy typical of neoliberal mindsets, governments are now treating agricultural investment as politically correct, and planning to raise agricultural investment in an attempt to revive crop and food supplies. Until 2007-2008, according to the FAO, development aid to farming provided by the OECD donor countries had been declining each year for over 10 years, presumably on the fond hope that “market forces” would make up the massive shortfall in funds needed.
Premier Wen Jiabao told China Central Television on February 10, 2011 that his government will spend 12.9 billion yuan (US$ 1.96 billion) this year to bolster grain production, improve water supply to farming, and fight desertification through tree planting, among other measures. Chinese and Indian buying of major food staples including the oilseeds is further intensifying shortage on world markets. Food import dependent countries that have benefited from higher export revenues on their minerals and metals exports, such as Bolivia, are also considering plans to use some of their record foreign exchange reserves to produce more food, and purchase food on world markets on a “precautionary basis” before prices rise further, increasing their stockpiles of the basic food staples. Increased purchases of traded food commodities inevitably spurs speculation and higher prices.
Overseas buying of agricultural products from the U.S., the largest exporter country for maize, soybeans, wheat and cotton, probably jumped 18 percent by value (but not tonnage) to a record US$ 115.81 billion in 2010, the US government announced in February 2011. China became the largest market for U.S. farm goods for the first time, with the value of shipments increasing 34 percent to US$ 17.5 billion, reflecting China's leading role as food importer – as well as manufactured goods exporter. Rising disposable incomes in India, China and other trade-surplus countries has quickly raised their ability to pay for higher food imports, but at the cost intensifying speculation.
Grain import demand is rising worldwide. Saudi Arabia’s cereal imports may reach a record this year, the FAO said on February 3, 2011 while Algeria, Morocco, Iraq, Bangladesh, Pakistan, Turkey and Lebanon have all issued tenders to buy more wheat or rice in February, as food price inflation further stoked the political unrest that has toppled long-standing dictators in Tunisia and Egypt. Wheat purchases by Algeria, North Africa’s second-largest importer (after Egypt), climbed to 1.75 million metric tons in January alone, according to commodity analysts at Goldman Sachs.
As noted previously, food import dependence is intensified by changing food habits. China, the world’s largest pork meat consumer, boosted demand for pork by 30 percent since 2000, and beef demand by about 10 percent, while its population only increased 5.3 percent in the same period, using UN data. Similar import growth trends apply in other Emerging economies, especially for feed grains used in poultry and fish rearing, driven by a shift in livestock, dairy and poultry production from small, family farms depending on pastures and local-produced, local-sourced inputs to bigger, more energy and chemicals-intensive agro-industrial production, with animals fed on maize and soybean meal. In turn this generates nearly total dependence on food trade, transport, and industrial inputs like pesticides, fertilizers and antiobiotics. For the latest updates PRESS CTR + D or visit Stock Market news Today
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