Food Prices: Up, Up and Away

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Consumers shop for fruit in a supermarket in Nantong, China, on Jan. 20, 2011. (Imaginechina via AP Images)

The U.N.’s Food and Agriculture Organization (FAO) released a report this week that food prices reached an all-time high in January. The Food Price Index rose 3.4% in January to 231, surpassing June 2008 levels that sparked food riots and hoarding from Haiti to the Philippines. Prices of all commodity groups except meat  — cereals, oil, dairy and sugar — gained over prices in December.

As I wrote here earlier this week, soaring food prices have been cited as one of the underlying causes of the  revolution underway in Egypt, and Algeria has reportedly made large purchases of wheat after deadly riots over high food prices broke out there last month. Al Jazeera is also reporting that Honduras, El Salvador, Guatemala, and Indonesia have all taken measures to limit the effect of food prices on farmers and consumers.

“Today’s announcement by the FAO should ring alarm bells in capitals around the world,” Policy and Research Director of Oxfam America Gawain Kripke said in a statement released after numbers came out. “Hundreds of thousands of people are already feeling the impact of rapidly increasing food prices. Good harvests are offsetting the worst for many but if prices remain high it will be just a matter of months before the world’s poor are hit by another major food price crisis.  Governments need to act now and act together to stop the rot.”

Kripke called for the Committee on Food Security to develop an emergency response plan for nations to coordinate trade policies and ensure protection for the most vulnerable people affected by rising food prices. He also called on the G20 Finance Ministers to increase investment in small-holder agriculture and encouraged governments to resist the urge to ban exports and hoard food in the face of rising prices.

At Davos 2011, economist Nouriel “Dr. Doom” Roubini told CNN that rising commodity prices posed the greatest threat to global stability.