UN warns of food price unrest

Developing countries face serious social unrest as they struggle to cope with soaring food prices, inflation that shows no signs of abating, 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 in an interview.

Signs of the social unrest these prices could cause 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 their food imports in what cereal traders described as “panic buying” to beef up reserves.

Financial Times