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Aug 13 2012
Rising Food Prices: G20 Emergency Meeting!

The world is enveloped with chaos after chaos, and the latest one added to the list is the rise in the food prices. The problem, though brewing since the last decade, has everyone (and I mean everyone) discussing about it. The G20 member countries are trying to identify the problems and co-ordinate a response to the surging food prices. The problem was identified after a US drought, arguably the worst in half a century, devastated crops in the world’s largest economy.

The conversations behind closed doors among senior G20 and UN agriculture officials about calling a session of a “new emergency forum” come after the cost of corn, or maize, surged to an all-time high, surpassing the level seen during the 2007-08 food crisis. The US government on Friday uplifted the fears of a price surge, saying the drought had forced the country’s farmers to abandon cornfields covering a larger area than Belgium and Luxembourg combined. The Department of Agriculture slashed its forecast for the crop and predicted record prices over the next year.

G20 officials plan to hold a conference call in the week of August 27 to discuss a meeting, which could be held in late September or early October, according to four officials familiar with the conversations. G20 officials emphasized the planned meeting was not a sign of panic. On the contrary, they said, it would be an attempt to avoid the kind of policies, including export restrictions and hoarding, that in 2007-08 transformed a shortage of agricultural commodities into the first full-blown food crisis in 30 years with riots in two dozen countries.

Despite aggravating problems around the word, policy makers are comforted by several factors. One is that the price of rice, a key commodity for food security in Asia, remains stable; another is that production of local African staples such as cassava has increased significantly over the past five years as countries boost their food security. Global demand is also less strong than in 2007-08 due to the impact of the financial crisis in economic growth, and countries have avoided beggar-thy-neighbor policies such as export bans and panic buying.

There is some argument whether the problem, deemed serious, is compelling in comparison to the food crisis of yesteryears. Yet, the G20 member countries argue otherwise!

Note: The blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.

Posted by Mex R&D at 13/8/2012 3:15:37 PM

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