Global Food Prices Hysteria, Hunger and Riots

Market Oracle

The situation with food prices in the world has been hysterical recently. In Russia, prices on food have already increased considerably as a result of the drought. The Russian government banned the export of crops, which boosted the prices on wheat and resulted in panic comments from Western experts who started predicting global hunger riots.

Extreme weather conditions have affected many parts of the globe this year, not just Russia alone. Torrential rains in Brazil and Colombia affected the harvest of cocoa beans. In India, crop acres of rice have declined as a result of massive floods. The reduction of the wheat production is expected in Canada, where floods also caused severe damage to the national agriculture.

Russia Today: Russia forced to introduce ban on wheat export after severe drought

As a result, world prices on wheat have skyrocketed (50 percent) since June 2010. Wheat became eight percent more expensive immediately, after Putin decided to ban the export of this product from Russia. Prices on pork, rice, oranges, coffee, cocoa and tea have been growing too. Western experts say that such a state of affairs will trigger hungry mutinies in third-world countries.

Growing food prices may doom over 100 million people to hunger, Ben Russell wrote in an article published by The Independent. Hunger-caused riots took place last year in Haiti, Mozambique, Senegal and Indonesia.

The UN Food and Agriculture Organization (FAO) revised the world forecast for the production of wheat in 2010. The world market will receive 651 million tons instead of the previously planned 676 million tons, which marks a reduction of nearly 20 tons. However, spokespeople for the organization believe that there is no need to panic.

They claim that the world market of wheat remains more stable now than it was during the food crisis in 2007-2008. Therefore, they say, there is no reason to believe that another world food crisis will shatter the world soon.

Russia may have serious problems with buckwheat. A large domestic company producing buckwheat, sent disturbing notifications to its partners. The company informed the partners of the price increase of 35 percent on its product and said that it was forced to restrict the sales of buckwheat. The new harvest will arrive only from Russia’s Altay region. The crops in many other territories have been destroyed with the drought. Wholesalers will have all reasons to raise prices to receive as much profit from buckwheat as possible.

The absence of buckwheat on the market is not a big tragedy, but it is obvious that prices on all other products will be growing inevitably against such a negative background.

Sergey Nikolayev

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