World food shortages to stay, riots a risk: FAO

NEW DELHI Wed Apr 9, 2008 7:32am EDT

U.N. peacekeepers stand guard while residents protest food prices on the streets in Port-au-Prince April 8, 2008. REUTERS/Eduardo Munoz

U.N. peacekeepers stand guard while residents protest food prices on the streets in Port-au-Prince April 8, 2008.

Credit: Reuters/Eduardo Munoz

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NEW DELHI (Reuters) - Food riots which have struck several impoverished countries could spread with shortages and high prices set to continue for some time, the head of the United Nation's Food and Agriculture Organization (FAO) said.

A combination of high oil and fuel prices, rising demand for food in a wealthier Asia, the use of farmland and crops for biofuels, bad weather and speculation on futures markets have pushed up food prices, prompting violent protests in a handful of poor states.

Jacques Diouf, director general of the Rome-based FAO, said on Wednesday during a trip to India that there was a growing risk of social instability in countries where families spent more than half their income on food.

"The problem is very serious around the world due to severe price rises and we have seen riots in Egypt, Cameroon, Haiti and Burkina Faso," he told reporters in New Delhi.

Five people have been killed in a week of demonstrations in Haiti over high food prices in the poorest country in the Americas, while unions in the West African nation of Burkina Faso called a general strike over soaring food and fuel costs.

"There is a risk that this unrest will spread in countries where 50 to 60 percent of income goes to food," Diouf added.

He said world cereal stocks were enough to meet demand for eight to 12 weeks, while grain supplies were at their lowest since the 1980s.

"This is due to higher demand from countries like India, China, where GDP grows at 8-10 percent and the increase in income is going to food," Diouf said after meeting India's farm minister, Sharad Pawar.

He said he was advising governments to invest in irrigation, storage facilities and rural infrastructure and increase productivity to meet the challenge of food scarcity.

PRICE SPIRAL

Global food prices, based on United Nations records, rose 35 percent in the year to the end of January, markedly accelerating an upturn that began, gently at first, in 2002.

Since then, prices have risen 65 percent. In 2007 alone, according to the FAO's world food index, dairy prices rose nearly 80 percent and grain 42 percent.

Some of the world's most populous countries have felt the impact of higher prices after rice joined a wider rally that has buoyed other grains like wheat and corn.

Rice prices in Thailand, the world's biggest rice exporter, have doubled since the start of this year after India heavily restricted and then banned the export of non-basmati rice to ensure it had enough to feed its people.

In Manila, President Gloria Macapagal Arroyo unveiled a series of measures to boost rice production as troops armed with M-16 rifles supervised the sale of subsidized grain and the government threatened to jail hoarders for life.

Pakistan recently deployed security personnel to guard its warehouses.

The FAO in a recent report said Burkina Faso, Cameroon, Egypt, Indonesia, Ivory Coast, Mauritania, Mozambique and Senegal have seen unrest in the last several weeks related to food and fuel prices.

In India, wholesale price inflation hit its highest in more than three years in March at 7 percent, posing a headache for the ruling coalition in Asia's third-largest economy with elections for local and national assemblies creeping up.

Price pressures had been building for several weeks, in large part driven by foodstuffs, and the government has stepped in with a string of duty cuts and export restrictions.

Analysts say fiscal steps were unlikely to roll back prices, and Indian leaders have said ensuring food security by boosting domestic production was a priority.

"I welcome economic growth in India and China, but I also hope they will invest in agriculture because these two countries account for 2.2 billion people out of 6 billion," Diouf said.

(Writing by Himangshu Watts; Editing by Mark Williams and Jerry Norton)

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