Food prices hit record high

Posted by Josette Dunn on 7th January 2011

Global food prices last month reached the highest since records began, exceeding the 2008 highs that sparked riots across the globe, according to figures from the UN.

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An index of food commodities tracked by the UN’s Food and Agriculture Organisation (FAO) rose for a sixth straight month to 215 points, above the previous high of 213.5 in June 2008, the agency said in a monthly report.

Sugar prices are at their highest in ten years, reaching 182 points and climbing for a third year in a row. Meat reached a high of 142 points compared to 128 points in 2008. Cereal prices rose the highest in four months to hit 238 points, while dairy also rose for the fourth consecutive month to settle at 208 points.

Abdolreza Abbassian, a senior economist at the FAO, told the Financial Times that the increase was “alarming” but that the situation was not yet a crisis similar to 2007-08, when food riots affected more than 30 poor countries, including Haiti, Bangladesh and Egypt.

”The world faces a food price shock,” he told the publication, adding that a prolonged spike could lead to “a food crisis”.

A probable jump in the prices of some food was predicted in October last year after Russia announced plans to curb grain exports.

The world’s third-largest grain producer, with a 13% share of the global wheat trade, suffered when deadly fires raged across the country during the summer, devastating as much as one-third of the country’s projected grain harvest for 2010. Grain prices were predicted to rise significantly as a result of the ban on exports by Prime Minister Vladimir Putin in a bid to contain domestic prices.

Meanwhile, in October, Rabobank pointed to “tight” sugar supplies in Brazil, one of the world’s largest sugar producers, which had led to prices rising strongly during the month.

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