A sharp rise in grain prices is reverberating around the world as nations face food inflation. There has been a 30-50 percent gain in the benchmark price of corn, wheat and soyabeans, are echoing the 2007/8 food crisis. Countries likely to face the biggest repercussions are those dependant on agricultural imports.
The Indonesian tofu industry is threatening to strike over the rise in soyabean prices and consumers in Iran took to the streets to protest the high cost of chicken.
“For sure there is growing concern across the world from developing countries about what this may mean for them,” says Marc Sadler, head of agricultural risk management at the World Bank.
A severe drought in the American Midwest has dramatically cut grain yield projections. Dry conditions in Russia, Ukraine and Kazhakastan, as well as inordinately wet weather in western Europe and a slow start to the Indian monsoon season are all contributing factors to the global crop worries.
For the time being, there are few signs of a repeat of 2007/8, in fact some countries are even suspending grain imports in the hopes that prices will drop, according to traders; but it is unlikely that it will happen and countries will be forced back into the market.
The strong dollar is adding to the worries as this can significantly raise the cost of grain for importers. Chicago corn futures are currently trading at around 6 percent over their highest value in 2008.
The people most likely to be affected are the world’s poorest population, who spend a greater percentage of their income on food. Rising food prices affect how much food they can buy, and also reduces aid agencies’ ability to buy food to assist those in need.