algeria - AP - January 6 2011
Youth chase a police officer during clashes in Algiers, January 6, 2011. Photo by AP
Text size
related tags

Record high food prices are moving to the top of policymaker agendas, driven by fears it could stoke inflation, protectionism and unrest and dent consumer demand in key emerging economies.

The United Nations' food agency (FAO) said on Wednesday that food prices hit a record high last month, moving beyond levels of 2008 when riots broke out in countries as far afield as Egypt, Cameroon and Haiti.

The FAO said sugar and meat were at their highest since its records began in 1990. Prices were at their highest since 2008 crisis levels for wheat, rice, corn and other cereals.

Last year, wheat futures prices rose 47 percent, buoyed by a series of weather events including drought in Russia and its Black Sea neighbors. U.S. corn rose more than 50 percent and U.S. soybeans jumped 34 percent.

Surging food prices have often provoked unrest in urban areas of poor countries, where imported food often makes up a high proportion of household purchases.

As the prices of milk, sugar and flour rose sharply in recent days, youths frustrated that Algeria's abundant gas-and-oil resources have not translated into broader prosperity rioted, setting buildings and tires ablaze and hurling stones at police in the Algerian capital. Food price riots also hit Algeria's Mediterranean city of Oran this week.

Security officers filled the tense working-class Algiers neighborhood of Bab el-Oued on Thursday after riots on Wednesday night. A police station and a mobile telephone store were among the buildings set on fire before police intervened to stop the violence near the city's ancient Casbah.

Neighboring Tunisia has also seen violent protests in recent weeks over unemployment, leading to three deaths. The unrest in Tunisia began when young Mohamed Bouazizi set himself on fire December 17 after police confiscated the fruits and vegetables he sold without a permit.

Bouazizi had a university degree but no steady work, and his hardship resonated with many in Tunisia, where unemployment stands at 14 percent but is much higher outside the capital. Tunisian President Zine al-Abidine Ben Ali dismissed three government ministers and the governor of region from where Bouazizi hailed in an attempt to restore calm to the country.

But on Thursday, a 17-year-old high school student set fire to himself in his school principal's office on Thursday after the school prevented a group of students from organizing a march in solidarity with Bouazizi's funeral gathering. At the funeral, some chanted "Mohamed, we weep for you today, we will make those who caused your death weep."

Analysts say African and Caribbean economies dependent on food exports could be particularly hard hit, helping stoke unrest and potentially pushing governments towards imposing export bans and expropriating foreign-owned farmland.

In Asia, official data and analyst estimates both pointed to inflationary pressures. Chilli prices have increased fivefold in Thailand in the last year and Indonesia's president called for households to plant food in their own gardens.

Alongside bad weather in Australia, Europe, North America and Argentina, rising Asian demand is at the heart of the spike. China, for example, is expected to buy 60 percent of globally traded soybeans in 2011/12, double its purchase of four years ago.

Most experts expect upwards price pressure to continue, particularly if countries slap on export bans and further squeeze supply and short-term investors again begin buying into agricultural commodities as they did in 2008.

If Asian and other emerging consumers have to spend more of their income on food, other purchases will fall -- and that could be bad news for a global economy that has placed much of its hopes for recovery on consumption in developing economies.

World Bank President Robert Zoellick urged governments in a newspaper opinion column to avoid protectionist measures as food prices rose and called upon the Group of 20 leading economies to take steps to make sure the poor get adequate food supply.

Food price protests were seen a factor in the ousting of Indonesia's long-term autocrat Suharto in 1998, and anger over a farmland purchased by South Korean firm Daewoo at a time of rising prices was in part blamed for a 2009 coup in Madagascar.

India's food price inflation rose to a one-year high of more than 18 percent in the year to the end of December, data on Thursday showed. The Indian government has used a range of measures for years to ensure stable food prices.

In China, several cities have implemented direct controls to limit food price increases and the central government has vowed to eliminate speculation in the country's commodities markets.