[DantesPeak]

Shortages and wheat and diesel reported in Egypt. I don't have to tell posters here that without diesel, food shortages are sure to follow.

$this->bbcode_second_pass_quote('', 'B')usiness Middle East
Economist Intelligence Unit

April 1, 2008
Section: Business Middle East 01 Apr 2008

Pressure cooker

Soaring food prices have led to widespread protests in Egypt, one of the world's largest wheat importers

Social unrest has been growing in Egypt on the back of rising inflation, which is undermining consumers' purchasing power, and general dissatisfaction with the fallout of economic reform. This has led to a rising number of demonstrations. These include further protests against rising prices by thousands of textile workers at Mahalla al-Kubra (who are generally credited with having started the current wave of labour protests in late 2006). Groups such as doctors, nurses and university professors have also threatened to strike, a rare phenomenon in Egypt.

The government has sought to address the discontent in several ways. It is especially attempting to improve subsidy provision, separating the production and sale of subsidised bread--the main element in the Egyptian diet--in order to reduce corruption. Families were allowed to add children to their ration cards in February for the first time since 1988 (increasing the total number of beneficiaries from 40m to an estimated 55m). Nevertheless, as rising wheat prices force more and more people to rely on subsidised bread, the queues are lengthening and supplies are coming under strain. Similar problems have also arisen regarding diesel fuel, which is used to power machinery and farm equipment. Shortages have led to outbreaks of fights at petrol stations, and accusations that the government is deliberately keeping stocks hidden to boost prices.

Consumer price inflation rose again in February, to 12.1% year on year, up from 10.5% in January. The month-on-month increase was 1.8% in February, compared with 4% in January. Food prices, which account for 40% of the basket of goods used to calculate consumer price inflation, rose by 16.8% year on year in February, similar to the 16.2% year-on-year increase recorded in January.

[abelardlindsay]

[anarky321]

that is a very arousing chart

[shortonoil]

DantesPeak quoted:

$this->bbcode_second_pass_quote('', 'F')ood prices, which account for 40% of the basket of goods used to calculate consumer price inflation, rose by 16.8% year on year in February, similar to the 16.2% year-on-year increase recorded in January.

[Zardoz]

$this->bbcode_second_pass_quote('abelardlindsay', '[')img]http://s.wsj.net/public/resources/images/NA-AP897B_RICE_20080330215613.gif[/img]

[cube]

$this->bbcode_second_pass_quote('Zardoz', '')$this->bbcode_second_pass_quote('abelardlindsay', '[')img]http://s.wsj.net/public/resources/images/NA-AP897B_RICE_20080330215613.gif[/img]

[strider3700]

$this->bbcode_second_pass_quote('cube', 'D')on't worry.

According to high school economics 101; when the price of a commodity rises, supply will increase!

[anarky321]

demand destruction is one of my favourite economic concepts

[KaiserCesar06]

$this->bbcode_second_pass_quote('cube', '')$this->bbcode_second_pass_quote('Zardoz', '')$this->bbcode_second_pass_quote('abelardlindsay', '[')img]http://s.wsj.net/public/resources/images/NA-AP897B_RICE_20080330215613.gif[/img]

[SolarDave]

$this->bbcode_second_pass_quote('joewp', 'H')ey, relax. The fundamentals don't warrant the current price. It's the speculators and anyway there's lots of new production coming on line this year from deep water and Arctic finds. Saudi Arabia's going to increase their rice capacity to 12.5 million bushels a day by next year, and the market is well-supplied since US inventories are fine.

Or something like that...

[Gerben]

$this->bbcode_second_pass_quote('KaiserCesar06', 'A')ccording to my high school economics 101, demand has increased and supply has decreased which has created a new equilibrium with a much higher price and a lower quantity than before.

[Zardoz]

Hungry crowds spell trouble for world leaders

$this->bbcode_second_pass_quote('', '"')Is it not said 'A hungry man is an angry man'?" commented Simon Nkwenti, head of a teachers' union in Cameroon, after riots that killed dozens of people in the central African country.

It is a proverb world leaders might do well to bear in mind as their impoverished populations struggle with food costs driven ever higher by record oil prices, weather and speculators trading in local market places and on global futures exchanges.

Anger over high food and fuel costs has spawned a rash of violent unrest across the globe in the past six months.

From the deserts of Mauritania to steamy Mozambique on Africa's Indian Ocean coast, people have taken to the streets. There have been "tortilla riots" in Mexico, villagers have clashed with police in eastern India and hundreds of Muslims have marched for lower food prices in Indonesia.

Governments have introduced price controls and export caps or cut custom duties to appease the people who vote for them, but on streets across Africa, those voters want them to do more.

[Puncak]

$this->bbcode_second_pass_quote('thor', 'W')hy do Asians tend to only eat rise anyway? Potato has served us pretty well over the centuries.

[sparky]

.
There IS speculation on farm commodities , and production will increase due to stronger price/demand , and this crisis will pass ...

The problem is there is more and more crisis coming faster and faster
across a larger span of issues ,
the melting arctic ice qualifying in the " it can wait tomorrow , there are bigger things" category

In the 50ies all the pundits predicted a world wide food crisis in the 70ies ,
we then got the green revolution , thanks to cheap energy we got cheap transports and cheap food ,
the population shot from 3 billions to 6.6 billions ,
mega cities sprouted all over the worlds , basically by being food subsidized

Now , we tip toe from one crisis to an other , getting off every times more by luck than by good policies ,
the very poor country folks in the third world will be crushed or left to starve of course ,
the middling population will see their standard of living being rolled back that is the real danger
once you have eaten meat , going back to gruel is hard to take
the newly prosperous city classes are going to be very pissed off to be told the party is over .
don't expect Armageddon this year , but you can heard the cracking of whole slabs of the financial system moving at a glacial pace ,
........inexorably


.

[dohboi]

"the melting arctic ice qualifying in the " it can wait tomorrow , there are bigger things" category"

LOL!

Yes indeed, if Arctic ice disappears this summer, as more and more scientists are now predicting, pretty much everything will be bigger than Arcitc ice!

When the newly open entire polar ocean starts soaking up the summer sun 24/7, we'll see what kind of a wild new world we've created.

And don't get me started on the rapidly increasing carbon release from melting tundra and the cocked clathrate gun.

Oh, but these aren't in econ textbooks so they must not exist, or they are mere "externalities." Will economists ever realize that we live inside "externalities."

The rice crisis is the perfect example of the major caastrophes converging to f the most vulnerable. Besides GW-caused drought and PO, the drive for bio-fuels, I believe, can also be added to the list of causes of the rice price explosion.

Much of China. especially the north, actually eats more wheat than rice. But as the price of wheat has been shooting through the roof--since US farmers are switching from it to corn to fuel SUVs--the northern Chinese in turn switch to more rice, raising demand and therefore price.

This kind of thing is happening everywhere, of course, not just in China. Few cultures rely on only one grain these days, so the price of one affects the price of all. And in our wonderous global market, a dramatic increase in price in one country quickly leads to dramatic rises elsewhere.

[shortonoil]

$this->bbcode_second_pass_quote('', 'S')audi Arabia's cabinet agreed on Monday to slash customs tariffs on almost 200 products in an effort to limit the effect of a looming global food shortage and tackle record inflation.

The discounts on import taxes, set to come into force from Tuesday, range between 15-20% and cover foodstuffs, building materials and consumer goods.

“The new decision also covers several products - including frozen chicken, eggs, vegetable oil, macaroni, milk, juices and canned food - that were previously imported after paying a tariff of 20%,” Saleh Al-Khulaiwi, director general of customs, told Saudi daily Arab News. “Tariffs for these items have been reduced to 5%."

[Tuike]

India cuts duties, bans rice exports to ease prices

$this->bbcode_second_pass_quote('', 'D')uty on maize imports was cut to zero from 15 percent, while a ban on exports of pulses was extended for 12 months. All exports of non-basmati rice had to stop, the minister said.

[Ferretlover]

$this->bbcode_second_pass_quote('dohboi', '
')And don't get me started on the rapidly increasing carbon release from melting tundra and the cocked clathrate gun.

[dohboi]

Thanks for the note, FL. Methane is likely to be the main form of carbon release (methane=CH4), but if the hotter conditions lead to drying, the vast peat bogs could catch fire, and that could burn, essentially forever, until the peat is all gone. In that case the carbon would be released as CO2, of course. Neither is good news.

[Ferretlover]

$this->bbcode_second_pass_quote('dohboi', 'T')hanks for the note, FL. Methane is likely to be the main form of carbon release (methane=CH4), but if the hotter conditions lead to drying, the vast peat bogs could catch fire, and that could burn, essentially forever, until the peat is all gone. In that case the carbon would be released as CO2, of course. Neither is good news.