Feb 10, 2011

Food prices rise due to climate and food insecurity

Rising food prices threaten social, economic and political instability across the world. The sharp increase of related inflation in India and China exemplify this disturbing trend worldwide. Climate patterns in consumer and producer countries such as Russia, Australia, Brazil, Vietnam and the US are seen by scientists as a long term reality. Even in China the expanding Gobi desert is wiping out essential wheat producing areas and in the South the melting of the Himalayan ice cap is creating irrigation nightmares. For example China's reaction of damming the Himalayan-based rivers threatens India, Vietnam, Thailand, Burma, Cambodia and Pakistan. This trend, although humanitarian and economic at face value more dangerously, has a profound impact on political and social stability. The following articles emphasize the major powers of Asia. However, food shortages and rising prices have already caused riots and revolutions across the African continent.

Read 'Inflation Worries Spread: China Raises Rates Amid Hit to Wheat Crop'

In the meanwhile India is being hit exceptionally hard by the surging food prices. Prime minister Manmohan Singh has warned that the country's rapid economic growth - GDP grew by 8,5% in 2010 - is under serious threat from inflation mounting up to 8,4%. He considers getting this inflation under control as a matter of urgency, raising the prospect of an 8th interest rate rise in under 12 months. Especially the food price inflation of 17% is considered to be unsustainable. 'Inflation poses a serious threat to the growth momentum. Whatever be the cause, the fact remains that inflation is something which needs to be tackled with great urgency', Singh stated.

Analysts believe that surging food and oil prices mean that India's central bank may have to raise interest rates before its next policy meeting, which is scheduled for March 17th. India's stock market has fallen this year on fears that high inflation will scare off foreign investors. Also wages are on the rise as workers demand pay that keeps up with the cost of living.

Read 'India's economic growth under 'threat' from inflation'

The last article about mounting religious turmoil in the Indian region of Kerala is an example of how the double impact of rising food prices and latent religious conflict can result into a situation of spiraling violence amongst otherwise peaceful communities.

Read 'In a pluralistic part of India, fears of rising Islamic extremism'