Jan 062011

Source: guardian.co.uk

UN food price index rises for sixth month in a row to highest since records began in 1990

 Author: Jill Treanor

Soaring prices of sugar, grain and oilseed drove world food prices to a record in December, surpassing the levels of 2008 when the cost of food sparked riots around the world, and prompting warnings of prices being in “danger territory”.

An index compiled monthly by the United Nations surpassed its previous monthly high – June 2008 – in December to reach the highest level since records began in 1990. Published by the Rome-based Food and Agriculture Organisation (FAO), the index tracks the prices of a basket of cereals, oilseeds, dairy, meat and sugar, and has risen for six consecutive months.

Abdolreza Abbassian, FAO economist, told the Guardian: “We are entering a danger territory.” But he stressed that the situation was not yet as bad as 2008.

Sugar and meat prices are at record levels, while cereal prices are back at the levels last seen in 2008, when riots in Haiti killed four people and riots in Cameroon left 40 dead.

Abbassian warned prices could rise higher still, amid fears of droughts in Argentina and floods in Australia and cold weather killing plants in the northern hemisphere.

“There is still room for prices to go up much higher, if for example the dry conditions in Argentina tend to become a drought, and if we start having problems with winterkill in the northern hemisphere for the wheat crops,” Abbassian said.

Prices have been rising steadily but Abbassian said that by now he had been expecting food prices to start to fall because many poorer countries had good harvests last year.

But this has not happened after unpredictable weather caused a poor wheat crop in Russia. Last year European wheat prices doubled, US corn prices rose more than 50% and US soybean prices jumped more than 30%

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