UN agency reports sharp increase in global food prices
A woman buys meat at a market in Piazza Vittorio in downtown Rome, Thursday, Aug. 9, 2012. (AP / Alessandra Tarantino)
Published Thursday, August 9, 2012 7:10AM EDT
Last Updated Thursday, August 9, 2012 10:27PM EDT
Untimely rains in Brazil, a delayed monsoon season in India, and an extreme drought throughout the U.S. Midwest have resulted in a sharp spike in global food prices, according to a UN agency.
The Rome-based Food and Agriculture Organization (FAO) released its July index on Thursday, which measures the monthly change in the international price of a basket of food. The agency reported that a surge in the price of grain and sugar led to an overall six per cent increase in the cost of food from June to July.
According to the FAO, drought damage in the U.S., which has recorded its hottest July in history, pushed the price of corn up by almost 23 per cent.
Dry weather and fire damage on Russian wheat farms has analysts predicting a poor harvest, sending the price for the grain up 19 per cent.
July also saw a sharp increase in the price of sugar, which jumped 12 per cent, ending a four-month steady decline.
“The upturn…was triggered by untimely rains in Brazil, the world's largest sugar exporter, which hampered sugarcane harvesting,” the FAO said in a news release.
The agency said concerns over India’s delayed monsoon season and poor rains in Australia also contributed to the sugar price hike.
In Canada, however, farmers could benefit from the dry conditions being experienced south of the border.
“Western Canada has enjoyed a lot of really significant moisture through the last three months and that’s going to really help create some full bins for them, plus some high value crops,” BMO’s national manager for agriculture David Rinneard told CTV’s Canada AM on Thursday.
Rinneard estimated that increased commodities around the globe will translate to a four per cent increase in Canadian food prices.
“The good news, I guess from a consumer perspective, is that so much of what goes into the cost of food is in fact not the food ingredient itself,” said Rinneard. “It’s labour and transportation that make up more than half the costs. The actual ingredient isn’t going to have a material effect on the cost of food (in Canada).”
The spike in food prices globally has one humanitarian agency warning of a looming food crisis in many developing countries.
“The world’s is already witnessing a record number of food-related emergencies,” said Oxfam in a statement released on Wednesday.
The agency estimates that US$ 7.83 billion is needed to respond to food-related crises in Africa.
“With the international response slowed by the global economic crisis, rising global food prices could pile more pressure on an overstretched humanitarian system.”
However, not all grocery items saw an increase in July.
The FAO reported that the price of meat decreased slightly last month, while dairy prices remained steady after five straight months of decline.