7 Nov, 2008 - The financial crisis gripping global markets could trigger a new wave of food riots across the developing world, the FAO has warned.
As the credit crunch hits agricultural markets causing commodity prices to tumble, farmers may cut their planting because of a lack of funds to buy fertilizer, the organisation said this week in its Food Outlook.
The report warned that even though prices of commodities such as corn, rice and wheat have dropped by between 40% and 60% “riots and instability could again capture the headlines” and cautioned against a “false sense of security”.
The twice-yearly FAO study said: “Under the current gloomy prospects for agricultural prices, high input costs and more difficult access to credit, farmers may cut their plantings, which might again result in a tightening of world food supplies.”
In the past 12 months food riots broke out across the globe in developing nations from in Egypt to Haiti as commodity prices for basic foodstuffs surged to record levels.
A senior FAO economist said yesterday further price increases could happen again during the 2009-10 harvesting season “unleashing even more severe food crises than those experienced recently”.
The possible worsening of the lack of available credit by next year could cause more problems for food producers, with the effect particularly pronounced in the developing world.
Even though commodity prices have slumped, the global food imports are predicted to pass US$1,000 billion for the first time ever in 2008 – an increase of 23% on 2007, and 64% higher than in 2006, the FAO revealed.
Developing nations will account for US$343 billion of food imports across the world in 2008, a jump of 35%, and many nations are trying to cut this bill in the midst of economic difficulties.