Agricultural experts today cast a wary eye on the steep rise in the cost of wheat prompted by a Russian export ban and the questions looming over harvests in other parts of the world because of drought or flooding with memories still fresh of food riots set off by spiking prices just two years ago,
Food prices rose 5 per cent globally during August, according to the UN, spurred mostly by the higher cost of wheat, and the first signs of unrest erupted as 10 people died in Mozambique during clashes ignited partly by a 30 per cent leap in the cost of bread.
“You are dealing with an unstable situation,” said Abdolreza Abbassian, an economist at the UN’s Food and Agriculture Organisation in Rome. “People still remember what happened a few years ago, so it is a combination of psychology and the expectation that worse may come,” he added. “There are critical months ahead.”
The FAO has called a special session of grain experts from around the world on September 24 to address the supply question. Given that the fields stretching out from the Black Sea have been the main source of a huge leap in wheat trade over the past decade, the fluctuating weather patterns and unstable harvests there will have to be addressed, he said.
It is an issue not limited to Russia alone. Harvest forecasts in Germany and Canada are clouded by wet weather and flooding, while crops in Argentina will suffer from drought, as could Australia’s, according to agricultural experts. The bump in prices because of the uncertainty about future supplies means the poor in some areas of the world will face higher bread prices in the coming months.
Food prices are still some 30 per cent below the 2008 levels, Abbassian said, when a tripling in the price of rice among other staples led to food riots in about a dozen countries and helped topple at least one government.
The wheat crop this year globally is also the third highest on record, according to the FAO, but the sudden supply interruptions make the markets jittery. In June, Russia was predicting a loss of just a few million metric tons due to hot weather, but by August it announced it would lose about one-fifth of its crop. Wheat prices more than doubled in that period.
“There are reasons to be watching this and to be concerned because regionally there will be supply challenges,” said Justin P. Gilpin, the head of the Kansas Wheat Commission. “There is uncertainty in the marketplace.”
-The New York Times News Service