[R-G] UN warns of unrest as food price inflation hits developing countries

[Richard Menec]

http://www.ft.com/cms/s/0/821913e0-5cdb-11dc-9cc9-0000779fd2ac.html

Financial Times             September 7, 2007

UN warns of unrest as food price inflation hits developing countries

By Javier Blas in Rome

Developing countries face serious social unrest as they struggle to cope 
with soaring food prices, the United Nations' top agriculture official has 
warned.

Jacques Diouf, director-general of the UN's Food and Agriculture 
Organisation, said surging prices for basic food imports such as wheat, corn 
and milk had the "potential for social tension, leading to social reactions 
and eventually even political problems".

Mr Diouf said food prices would continue to increase because of a mix of 
strong demand from developing countries; a rising global population, more 
frequent floods and droughts caused by climate change; and the biofuel 
industry's appetite for grains.

"That combination of factors would most likely lead to increases in food 
prices," Mr Diouf told the Financial Times.

Signs were seen in Mexico this year where mass protests were triggered by 
rising corn prices. Mr Diouf said food represented about 10-20 per cent of 
consumer spending in industrialised countries, but up to 65 per cent in 
developing nations.

"If we continue to see an increase in their [food] prices and in their 
import bill for food, there is a serious potential situation," Mr Diouf 
said.

The warning comes as wheat prices are at a high, forcing developing 
countries such as India and Egypt to pay record prices for imports in what 
cereal traders described as "panic buying" to beef up reserves.

Wheat prices this week rose to a record $8.86 a bushel in Chicago, up about 
60 per cent since January. Dairy product prices have also set records, while 
other commodities, such as corn and soyabeans, are trading well above 
historical averages.

Mr Diouf said although the biofuel industry directly increased the 
consumption of only a handful of agricultural commodities, such as corn and 
rapeseed, its effect spread to other food products because less acreage was 
devoted to non-biofuel crops and the cost of feeding livestock with grain 
was pushed up.

"The biofuel industry is a new factor creating demand for food for a 
non-food use," he said.

Fears about the inflationary impact of biofuels on global food prices have 
prompted Cargill, the world's largest agricultural company by revenues, to 
question the White House-led push for an increase in ethanol production 
through tax subsidies.

Additional reporting byEoin Callan in Washington

Copyright The Financial Times Limited 2007

==============
This email was sent to you as part of an alternative news service,
by Richard Ménec.  You can 'subscribe' or 'unsubscribe' by
replying to the sender with either term in the subject field.
Feel free to tell your friends.
Our website: http://booksinternationale.pbwiki.com/
In accordance with Title 17 U.S.C. Section 107, this material
is distributed without profit to those who have expressed a
prior interest in receiving the included information for research
and educational purposes.
==============