World food inflation prompts desperate hoarding
Financial Times reports that governments across the developing world are in the process of hoarding food as a means of quelling panic and restraining food inflation. Yet this action has caused the price of agriculture commodities like wheat and sugar to skyrocket. Related rioting and unrest have been common topics of conversation at the World Economic Forum in Davos, Switzerland.
Food hoarding leads to record prices for staples
Wheat, the most important global food staple, reached a two-and-a-half-year high Thursday at $852.60 per metric ton — $9.33 per bushel. This price spike prompted both Algeria and Saudi Arabia to purchase wheat in exorbitant amounts, before prices fly out of sight. Algeria purchased 800,000 tons of wheat, while Saudi Arabia has stated that it plans to double its current stockpile.
Sugar is already beyond the reach of most Algerians, priced at $825.50 per metric ton, the highest price for the commodity in 30 years. Rioters, inspired in part by recent unrest in Tunisia and Egypt, have taken to the streets, chanting “Bring us sugar!”, Financial Times reports. Rice is another significant agricultural staple that is being ordered in large quantities. Indonesia upped its typical 200,000-ton purchase to 800,000 tons, while Bangladesh announced it will double its normal rice purchase in 2011.
The pressure to produce
As food prices for staples continue to rise, the pressure on farmers to produce increases, as demand for basic foodstuffs cannot flag. Gregory Page of Cargill, the world’s top agricultural commodities trading company, believes that as long as optimal weather patterns for growing prevail, food prices will be far from their peak. Agriculture in developing countries may be forced into more activity that the lands can sustain.
If there is drastic change in weather patterns – or the list of countries with export bans increases – prices could be pushed to more extreme levels.