Food costs at record high: UN

By Svetlana Kovalyova and Christopher Doering, Reuters

MANILA/WASHINGTON–Global food prices tracked by a U.N. agency hit their highest level on record in January, a problem set to worsen after a massive snowstorm in the United States and floods in Australia. The United Nations said on Thursday its Food and Agriculture Organization (FAO) Food Price Index rose for the seventh month in a row to reach 231 in January, topping the peak of 224.1 last seen in June 2008. It is the highest level the index has reached since records began in 1990.

“These high prices are likely to persist in the months to come,” FAO economist and grains expert Abdolreza Abbassian said in a statement. Wheat underscored the problem affecting commodity prices around the world, settling on Thursday slightly lower after hitting a 2-1/2 year high earlier in the day. Corn and soybeans, which also have been hovering near long-term highs, also declined. Global food inflation is a mounting worry for world leaders. It has contributed to political unrest in countries with high poverty rates and unemployment, as evidenced in the toppling of Tunisia’s president in January. That unrest has spilled into Egypt, Yemen and Jordan. In response, some countries are increasing food imports and have built stockpiles to meet their domestic needs. Among them is Algeria, wary after food riots in early January. It has made huge wheat purchases to avoid shortages, and on Thursday it announced plans to lift a 19-year-old state of emergency in a bid to avert spreading protests. In Central America, Honduras has frozen prices on many basic foodstuffs despite complaints from farmers. El Salvador is increasing anti-poverty programs by 30 percent, and Guatemala is considering slashing import tariffs on wheat and is handing out food and cash vouchers to landless peasants. World Bank President Robert Zoellick in a Reuters interview urged world leaders to “wake up” to the dangers of rising food inflation, a problem said he sees no relief from. “We are going to be facing a broader trend of increasing commodity prices, including food commodity prices,” he said. Supply the Key Catastrophic storms and droughts have slammed the world’s leading agriculture countries in recent months, including flooding and a massive cyclone in Australia and a powerful winter storm that swept across the United States.