Stockpiling for political and social upheaval
Governments worldwide will increase their role in global food markets and might boost stockpiles and subsidies or impose trade curbs to head off protests similar to those that have rippled through the Middle East, commodities traders told Bloomberg.
“Greater political intervention in food matters is only to be expected,” Alan Winney, chairman of Emerald Group Australia Pty Ltd., said in an interview at a sugar-industry conference in Dubai. “Governments will be careful to take pre-emptive measures to prevent increases in food prices.”
Countries across Africa to Asia are increasing imports or releasing supply from state reserves to cool inflation as rising demand and adverse weather cut harvests and push food prices to record levels, Bloomberg said.
“Food inflation is there to stay this year as cereals, soft commodities are all affected by supply contraction,” said Vijay Iyengar, managing director of Agrocorp International Pte Ltd.
The higher costs of wheat, sugar and dairy products sent the United Nations’ World Food Price Index to an all-time high last month. The jump has contributed to democratic revolts in Tunisia and Egypt, as well as other Arab nations, Bloomberg said.
Finance ministers from the Group of 20 nations signaled their concern this weekend that surging commodity costs are driving global inflationary pressures. Price developments pose challenges “for both consumers and producers,” the G-20 nations said in their statement after a meeting in Paris.