The world could be “one crop failure away from an actual food crisis”, said George Wehrfritz and Jason Overdorf in Newsweek. Driven partly by speculation, the per-ton cost of rice, wheat and corn has surged 50% or more since mid-2007; Thai white rice prices are up 40% since the start of the year and world rice stockpiles are at their lowest levels since the 1980s.

As governments with grain surpluses tighten their grip on reserves, countries reliant on imported staples “are scrambling to secure supplies”. The increases have sparked food riots in Asia and Latin America.

What’s behind the rise?

Two main factors are underpinning rising food prices, noted John Greenwood in The Sunday Telegraph. Governments in the US, EU and elsewhere have set legally binding targets for producing biofuels, while increased demand for protein-rich foods from emerging markets such as China, India, Russia and Brazil is squeezing traditional agriculture.

Producing a kilo of meat takes many times the number of acres needed for a kilo of rice, added James Moore in The Independent. The weak dollar, which has seen long-term speculators entering agricultural markets “alongside the usual band of speculators”, weather problems and suspected hoarding have all compounded the damage.

And the consequences?

The UN’s top humanitarian official, Sir John Holmes, warns escalating prices and resulting food riots threaten to destabilise weak governments, said David Adam in The Guardian. The crisis means consumers and governments no longer take rice – the staple food in half the world – for granted, said Thomas Fuller in the IHT, and it could speed up the adoption of genetically modified strains.

Don’t count on a lasting relief from the crisis any time soon. While rising prices should ultimately improve supply, global cereal demand will expand 2.6% this year.

Source:http://www.moneyweek.com/file/45238/world-heads-towards-food-crisis.html