IN THE course of a few weeks world rice prices have increased from $580 to $850 a tonne and over the last year more than doubled. Three billion poor people depend on rice as a staple food, often spending 50-70 per cent of their income on it. This year for the first time 50 per cent of the world's population is urban.
It is therefore not surprising to find the International Monetary Fund warning that unless action is taken urgently to stem price increases in this and other basic food commodities such as wheat, maize, soya beans or lentils there will be many more protest demonstrations and riots by urban populations. They have already vented their anger in Niger, Burkino Faso, Senegal, Cameroon, Indonesia and Argentina. They are being priced out of the market place by an average 40 per cent increase in the price of their normal meals over the last year, for which their basic incomes or subsidies utterly fail to compensate.
Governments in India, China, Vietnam, Egypt and Saudi Arabia have recently taken steps to cut tariffs on food imports and/or reduce food taxes to keep prices down. That upsets their economic planning and budgetary balances. The scale of the problem can be understood in figures supplied by the Food and Agriculture Organisation which reveal that in Africa this year cereal import bills for poor countries will increase by 49 per cent, and will soon be nearly double what they were five years ago. There will be immediate effects on large refugee populations like Darfur.
According to officials in the United Nations World Food Programme we are facing not just a short-term problem but a structural change in the price of food so that there may be no such thing as normal prices any more. This is because of a deepening imbalance in the demand for, and supply of, food commodities. Factors such as the burgeoning claims for more and different food among the new middle classes in China and India are driving increased demand. So is the rising world population. And the huge growth in the use of agricultural land for biofuels to offset dependence on fossil-based, carbon-heavy energy sources such as oil and gas reinforces these trends enormously. Among the changing supply factors are the effects of prolonged droughts in food basket states like Australia, floods in other producing states and similar shifts that can plausibly be linked to long-term climate change.
All this has the makings of a profound economic and political change in circumstances for vulnerable populations and states all round the world. The rapid shift in basic food availability and pricing requires much more urgent and sustained attention from governments and international organisations than it has received so far. Proponents of the failing Doha international trade round argue strongly that the issue can best be tackled by a renewed drive to bring it to a conclusion. If that would free up the supply and demand of staple foods they may find that these changes suddenly shift attitudes of many states in a new set of negotiations. No state is immune from these inflationary trends.