Monday, January 17, 2011

New age of intervention in food prices - Telegraph

In India, people are upset about onions. Expensive cooking oil is causing hoarding in China, a practice banned by the government. Meanwhile, flour and bread are the main source of riots in Algeria and now Jordan.

Worries over food prices are gathering pace and triggering alarm among politicians across the world. For there is nothing more likely to bring down a government than ignoring starving citizens, as Marie Antoinette found to her cost during the French Revolution and the Tunisian ruler found this week when he was toppled by rioting protestors.

Rice, the main food of most Asian countries, is seeing relatively stable prices thanks to good harvests from Thailand. It is countries reliant on wheat, the biggest global staple, that are likely to see the most civil discontent, especially in Africa.

Ironically, global stockpiles of wheat are higher than they have been in years, despite the fact that the price has hit a record of more than £200 per tonne in London, having risen 90pc during last year.

Part of the problem is that the food isn't going where it's needed. And partly futures prices are rising on fear of supply shortages to come.

If basic food becomes the subject of speculation by hedge funds and TBTF banks such as J P Morgan then the world is in for a hard time and there will be considerable unrest

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