The UN's Food Price Index rose 2.2 percent in February, pushing global food prices to their highest point since 1990, when the Index began. BBC News reports that the Food and Agriculture Organization is saying that "volatility in the oil markets" due to turmoil in North Africa and the Middle East are "adding to an already difficult and uncertain situation." The Index has risen for eight consecutive months, and Barron's notes that prices may climb even higher in the month of March.
The global food price rise is being called a "repeat" of the food crises in 2007-2008. So is this one going to be as bad as the last? As the "record high" headline was being splashed on news websites, we looked for expert's answers to this question:
What Helped Spur the 2007-2008 Food Crisis?
According to the U.S. State Department, export restrictions by producer countries spurred panicked buying and stockpiling of food by others. These purchases helped exacerbate a crisis that sent rice prices soaring 224 percent and wheat and corn prices 89 precent from 2004-2008. The stockpiling "fueled the price increases they were supposed to mitigate. In some cases, those increased stocks resulted in massive losses and food waste."
In examining the 2007-2008 crisis, The Wall Street Journal's Caroline Henshaw cites a 2008 World Bank report that concluded, "among the competing influences of speculative investment, a weak dollar and rising oil prices during the food price spike of 2007-08, 'the most important factor was the large increase in biofuels production in the U.S. and the EU.'"
What's One Major Difference Between 2008 and 2011?
The price of rice is "much lower today," say experts cited by the Associated Press. The latest food price increases were due mostly to "higher prices of cereals, meat and dairy products." Abdolreza Abbassian, senior grains economist with the Food and Agriculture Organization, notes in the AP article that "compared to the crisis of 2007-08, rice prices today are half what they were then."
Why Is the Price of Rice 'Much Lower' Today?
Three reasons: "stockpiles are near seven-year highs; global output for this year is predicted to hit a record; and good weather has spared crops around the world," CNN reports. Of those listed, the single reason for lower rice prices cited by the network's unnamed "JP Morgan analyst" was the recent spate of good weather: "Basically, getting hit by bad weather is like playing roulette. In 2008, rice riots during that year’s global food crisis were due to droughts and floods that just happened to hit rice-producing regions. Not so this year. Supply is up because weather has been kind, so the price of globally-traded rice has remained stable."