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LATEST NEWS UPDATES | All is not well on the global food front

All is not well on the global food front

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published Published on Oct 12, 2010   modified Modified on Oct 12, 2010

Reports of a possible global food crisis could not have come at a worse time for India. Food inflation is still over 16% and though plentiful rains this year hold out the promise of one of our best agricultural years ever , last week’s warning by the US administration of ‘dramatically’ lower supplies of corn, rice and wheat could force the RBI to tighten more than otherwise warranted in order to rein in prices.

The Food Security Bill, which has already run into rough weather for want of a viable and efficient delivery mechanism, could face a fresh threat on account of the additional financial commitment it will entail in a scenario of rising food prices.

The US department of agriculture’s prediction that the country’s stocks of corn will fall to their lowest level in 14 years saw prices of agriculture commodities hit their upper limit for the day at the Chicago Board of Trade, the world’s big (gest futures exchange. The Reuters-Jefferies CRB commodities index has risen to a two-year high as wheat, soyabean, sugar, cotton and barley prices rose in tandem in Europe. If prices continue to rise, global slowdown woes could be compounded by food inflation

The global food situation is worrisome as the combination of an unusually hot summer in the US, drought in some large exporting countries including Russia and Brazil and heavy rain in Canada and Europe have hit grain and oilseed crops hard. The fall in supplies has prompted countries like Russia and Ukraine to impose export restrictions on grains.

Meanwhile, big importers in West Asia and North Africa have reportedly started to hoard supplies. For now, fears of a repeat of the 2007-08 food crises seem misplaced. But with speculative forces entering the fray, worries about the role of speculation in pushing up prices will resurface.

To the extent that we are not net importers of foodgrains, we may not be affected much by the looming crisis. But we will not be immune from it either. The last time global food prices rose in 2007-08 , prices rose in India too, though by less than the international price. And that is bad news for all of us, especially for the 370 million below the poverty line.


The Economic Times, 12 October, 2010, http://economictimes.indiatimes.com/opinion/editorial/All-is-not-well-on-the-global-food-front/articleshow/6733286.cms


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