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Food price shocks a serious threat, UN says

World leaders must take swift, co-ordinated action to ensure that food price shocks do not turn into a catastrophe that could hurt tens of millions of people in coming months, the United Nations’ food agencies said in a statement on Sept. 4.

Global alarm over the potential for a food crisis of the kind seen in 2007-08 has escalated as drought in the U.S. Midwest has sent grain prices to record highs, fuelling a six per cent surge in the UN Food and Agriculture Organization’s (FAO) July food price index.

FAO said in a joint statement with the World Food Program (WFP) and the International Fund for Agricultural Development (IFAD) that swift international action could prevent a renewed food crisis.

It said leaders must tackle both the immediate issue of high food prices, as well as the long-term issue of how food is produced and consumed at a time of rising population, demand and climate change.

Senior G20 officials held a conference call last week on rising food prices, but leaders will wait for September’s crop report from the U.S. Department of Agriculture before deciding whether to take joint action on the issue, France’s farm minister said on Aug. 28.

The World Bank says world food prices jumped 10 per cent in July as drought parched croplands in the United States and Eastern Europe. It is urging governments to shore up programs that protect their most vulnerable populations.

From June to July, corn and wheat prices rose by 25 per cent each, soybean prices by 17 per cent, and only rice prices went down, by four per cent, the World Bank said.

Overall, the World Bank’s Food Price Index, which tracks the price of internationally traded food commodities, was six per cent higher than in July of last year, and one per cent over the previous peak of February 2011.

“We cannot allow these historic price hikes to turn into a lifetime of perils as families take their children out of school and eat less nutritious food to compensate for the high prices,” World Bank group president Jim Yong Kim said. “Countries must strengthen their targeted programs to ease the pressure on the most vulnerable population, and implement the right policies.

“Africa and the Middle East are particularly vulnerable, but so are people in other countries where the prices of grains have gone up abruptly,” Kim added.

A severe drought in the United States has sharply cut corn and soybean yields this year, while a dry summer in Russia, Ukraine and Kazakhstan has hurt wheat output.

The World Bank said its experts do not foresee a repeat of 2008, when a food price spike triggered riots in some countries.

“However, negative factors — such as exporters pursuing panic policies, a severe El Niño, disappointing Southern Hemisphere crops, or strong increases in energy prices — could cause significant further grain price hikes such as those experienced four years ago,” the bank said.

Separately, finance ministers from the 21-member Asia Pacific Economic Cooperation (APEC) group issued a statement at their meeting on Thursday in Moscow urging countries “to avoid export bans” in response to food price concerns.

APEC member Russia imposed a temporary embargo on grain exports two years ago after crops failed.

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