World food prices reach record high

World food prices reached their highest level ever in January, the UN food agency said on Thursday, as economists warned chaos in Egypt could push prices up further and foment more unrest in the region.

Rising food prices have been cited among the driving forces behind the recent popular revolts in north Africa, including the uprising in Egypt and the toppling of Tunisia's long-time president Zine El Abidine Ben Ali.

And in its latest survey, the Food and Agriculture Organisation (FAO) said its index, which monitors monthly price changes for a variety of staples, averaged 231 points in January -- the highest since records began in 1990.

"The new figures clearly show that the upward pressure on world food prices is not abating. These high prices are likely to persist in the months to come," said Abdolreza Abbassian, an economist for FAO, which is based in Rome.

Oxfam has blamed major food price rises on reduced production due to bad weather, increased oil prices making fertilizer and transport more expensive, increased demand for biofuels, export restrictions and financial speculation

The Index rose by 3.4 percent from December -- with big increases in particular for dairy, cereal and oil prices. The rises were most significant in China, India, Indonesia and Russia, data from FAO's monthly report showed.

Capital Economics, a consultancy in London, blamed extreme weather conditions last year and added: "The resulting increases in food prices have contributed to social unrest in many countries, including in Egypt."

The consultancy warned of a vicious circle in which the crisis in Egypt could raise prices even further since other Arab governments were beginning to restrict exports and stockpile food supplies to prevent similar unrest.

"Even if the crisis in Egypt eases soon, the actions taken by governments elsewhere to prevent similar uprisings in their own countries will add to the upward pressure on global agricultural commodity prices," it added.

The FAO's Abbassian however said some countries had become better at managing price shocks after a series of food riots in 2007 and 2008.

"They have learnt from previous episodes," he said, adding: "There are a lot of factors that could spark turmoil in countries and food is one of them."

The FAO data showed that prices for dairy products rose by 6.2 percent from December, oils and fats gained 5.6 percent, while cereals went up by 3.0 percent because of lower global supply of wheat and maize.

"The increase in prices follows stronger export demand during the last month and concerns about tightening supplies of high quality wheat. The market was also supported by higher oil prices and a weaker US dollar," FAO said.

Meat prices remained broadly stable due to a fall in prices in Europe caused by last month's scare over dioxin poisoning in eggs and pork in Germany, compensated by a slight increase in export prices from Brazil and the United States.

Chris Leather, a policy adviser for international aid agency Oxfam said the news "should ring alarm bells in capitals around the world."

"High global food prices risk hunger for millions of people," he said, calling for concerted international action to prevent price volatility.

He also urged countries to "avoid repeating the mistakes of the past when countries reacted to spiralling prices by banning exports and hoarding food."

Oxfam blamed the price rises on reduced production due to bad weather, increased oil prices making fertilizer and transport more expensive, increased demand for biofuels, export restrictions and financial speculation.

The FAO data showed the Food Price Index averaged 200 points over the whole of 2008, at the height of the 2007/2008 food crisis. The index breached that level for the first time in October 2010 with 205 points and kept rising.

The report showed that Somalia and Uganda have been particularly hard hit in Africa and that the ongoing unrest in Ivory Coast has helped push up prices in West Africa as a whole because of its status as a key transport hub.

But the most dramatic rises were seen in Asia, with a surge in prices across the board in India due to "unseasonal rains" during the harvest season "which resulted in severe damage to the summer crop and supply shortages," FAO said.


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