by Adeniyi Abdul
The world might be on the brink of a food crisis due to rising prices in the US. The current drought, which is the worst in 50 years has pushed prices of agricultural commodities to record highs. The last food crisis in 2007-2008 led to food riots in over 30 countries including Bangladesh and Haiti, however we may be in for even worse times as prices of foods such as Corn and Soyabean have surged even higher. Benchmark corn futures surpassed $8 a bushel for the first time, hitting a record $8.055, while benchmark soyabeans also hit a fresh peak at $17.115.
“I’ve been in the business more than 30 years and this is by far and away the most serious weather issue and supply and demand problem that I have seen by a mile,” a senior executive at a trading house told Financial Times. “It’s not even comparable to 2007-08.”
And according to global strategist at Rabobank David Nelson, “today the [US crop] disaster is real, whereas to some degree the big run-up in prices in 2008 was speculatively driven.”
“I am certainly concerned about the recent rises in food commodity prices, given their potential implications especially for the vulnerable and the poor, who spend as much as 75 per cent of their income on food.” says José Graziano da Silva, director-general of the UN’s Food and Agriculture Organisation.
Chief economist at the US Department of Agriculture, Joseph Glauber however believes the situation now is much better than that of 2008, saying “Prices are higher, and there’s no question about that, but we really had an extreme shortage of wheat in 2007-2008 and I don’t see that at this point.”