Rising Food Prices Spell Trouble For World Leaders

Bandar Seri Begawan - From Africa to Europe to Asia, rising food prices are causing collective jitters and even riots.

Reuters reported from Rabacsese, Hungary, last Friday that high feed prices and competition from industrial farms in the West have made it increasingly difficult for smaller farms to survive. A recent global rally in grains prices, coupled with a serious drought in Hungary which halved the maize crop last year, has put further strain on small holders already grappling with falling consumption and an ailing economy.

Gyula Nagy, a 60 year-old farmer who has been involved in the business for two decades, has witnessed the slow decline of Hungary's farm sector from flourishing collective farms before the end of communism in 1989 to struggling smallholders today. Now he is struggling with the surge in grains prices, fuelled by rising demand from biofuels and emerging economies in the Far East. "A crisis of this magnitude has not occurred since I've been involved in farming," Nagy said.

The Agriculture Ministry last month showed that since 2003, one year before Hungary's entry into the European Union, 200,000 smallholders went out of business. With global grains prices projected to rise by 20 to 50 per cent by 2016, according to an Organisation for Economic Co-operation and Development (OECD) survey published last year, smaller farms in eastern Europe will find it increasingly difficult to compete with their bigger, more efficient rivals.

Anger over high food and fuel costs has spawned a rash of violent unrest across the globe in the past six months. Governments have introduced price controls and export caps or cut custom duties to appease the people who vote for them. Sub-Saharan Africa is particularly vulnerable: most people survive on less than US$2 ($3) a day in countries prone to droughts and floods where agricultural processes are still often rudimentary. For African households, even a small rise in the price of food can be devastating when meals are a family's main expense.

"People have been driven to destruction because they no longer know what to do or who to talk to," said Ousmane Sanou, a trader in Patte d'Oie, one of the areas worst hit by February riots in Burkina Faso's capital, Ouagadougou.

"They understand it's the only way to get the government to change things. Prices must come down — otherwise we're heading for a catastrophe."

"There are very few governments, especially in this region, that are going to be strong enough to be able to encourage that normal economic incentive to come through over the course of time," said Standard Chartered Africa research head Razia Khan.

So more and more governments in Africa may opt for food aid, especially subsidies, as recommended by donors like the IMF. -- Courtesy of The Brunei Times

Click Here To Have Your Say On This Story

Brudirect.com News

Brunei's Fastest Growing Website with