BASIC NEED: The Philippines, the world's biggest buyer of rice, has been hardest hit in Asia, by its rocketing price. -- AFP

View more photos

And the hungry are raising a din, as rising food prices and the impact of knock-on inflationary effects on low-income families across the globe breed social unrest throughout the developing world.

With world inventories of staples like rice, wheat and corn at all-time lows, rising agricultural commodity prices are being passed on to consumers.

As surging oil prices overshadow efforts to tackle world hunger, Dr Zoellick outlined a 'New Deal for a Global Food Policy' with a suite of multi-

lateral trade initiatives last Wednesday, in the face of skyrocketing food prices.

Governments around the world have taken radical unilateral measures in recent weeks to control their countries' supplies of rice.

Egypt said last week it will ban all rice exports for six months. Cambodia has stopped all private-sector exports of rice. India and Vietnam also have imposed restrictions to protect domestic consumption.

Prices of staple grains - corn, wheat and rice - have also risen since 2005, under pressure from farmers who would rather plant crops for biofuels than for food; the lack of technological breakthroughs in crop yields; and drought and disease.

Corn gained 73 per cent in the past year, touching a record US$6.03 (S$8.34) a bushel in Chicago on Thursday. Soya beans are up 65 per cent in the past 12 months, reaching US$15.86 on March 3, the highest ever.

Wheat, meanwhile, rose to a record US$13.50 a bushel on Feb 27 - more than doubling in the past year.

The price of rice, however, has taken centre stage in the past fortnight.

This week, store shelves were wiped cleaned in Hong Kong and Singapore. Poorer Asian nations like the Philippines and Indonesia have seen demonstrations calling for a curb on rising prices.

The Philippines, the world's biggest buyer of rice, has been hardest hit in Asia. President Gloria Arroyo has been criticised by protesters for her handling of the food situation.

In the past week, investigators there have raided rice warehouses and arrested traders buying subsidised rice from the government to sell at a higher price.

The government has even threatened to charge rice hoarders with economic sabotage - a crime that carries a life sentence.

This latest wave of food insecurity was sparked last week when the Philippines appealed to Vietnam to help avoid a shortage by supplying it with 1.5 million tonnes of rice this year.

The news contributed to an overnight 30 per cent spike in Thai rice prices to US$760 a tonne - more than double the US$360 fetched less than three months ago.

Adding to the supply shortage, Indonesia said on Thursday it may join China, India, Vietnam and Egypt in curbing exports.

The United Nations Food and Agriculture Organisation (FAO) said such moves will worsen matters, cutting global exports of the grain by 3.5 per cent this year.

Over the past few months, food riots have broken out in Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen.

In Egypt, where the price of bread is up 35 per cent and cooking oil up 26 per cent, at least seven people have died in fights in queues for subsidised bread.

The developed world has not been spared either. Bread prices have risen in the United States and Europe - with reports last week predicting baguette prices in France will rise between 5 and 7 per cent over the next few weeks.

Economists say the food shortage should not have come as a surprise.

The UN warned in February that 36 countries, including China, face food emergencies this year, as stockpiles of staples fell to 30-year lows.

The FAO previously released data showing a 23 per cent spike in food costs worldwide from 2006 to last year. Within a year, the prices of grains shot up 42 per cent, oils by 50 per cent and dairy products by 80 per cent.

Meanwhile, investment funds and other speculators have bet on commodity prices, accelerating the self-fulfilling cycle.

Ironically, it is the food producers - typically poorer countries dependent on cheap staples - that will suffer the most as domestic consumption is exported to richer countries that can afford the surging commodity prices. The food scarcity and resulting retail price climbs affect lower-income households more as they tend to spend a relatively larger proportion of their earnings on food.

The ingredients causing the sharp rises are many.

On the demand side of the equation, the World Bank predicts global requirements will double by 2030 on the back of a three billion spike in the world's population by 2050.

Data from the US Department of Agriculture shows that global rice inventories are currently enough to cover only 17 per cent of consumption - compared to 35 per cent eight years ago.

Nearly half of the world's 6.6 billion people depend on rice to survive, and it is a staple for more than 2.5 billion people in Asia. With growing populations and rising economic growth, the world is already eating more grain than is harvested.

With the standard of living soaring in high-growth countries like China and India, demand for non-staples like meat and dairy products is also rising. Apart from boosting their prices, costs of grain to feed cattle and livestock are also shooting up.

Supply of food, on the other hand, has fallen due to consecutive years of bad harvests and climbing agricultural production costs.

The additive that is overwhelming the calamitous mix, however, is biofuels.

As crude oil prices continue to hit record highs, developed economies like the US and European Union champion the switch to fossil fuel substitutes.

Dr M. Nasir Shamsudin, agricultural and resource economist at Universiti Putra Malaysia's Faculty of Environmental Studies, says this is what makes the current situation different from the past.

'In previous oil price shocks, the impact on agriculture was only to push up costs of production. Now, with more sustained interest generated in the biofuel issue, food is not just more expensive to produce. People are also facing decreasing food supplies.'

Vast tracts of farmland are reallocated to the cultivation of biofuels like sugar cane and corn - both used in ethanol production. Other staples diverted away from feeding man to machine include soya beans, palm oil and cassava.

The UN Economic and Social Commission for Asia and the Pacific (Escap) projects that the food-to-fuel phenomenon will be 'one of the main drivers' of food price hikes estimated at 20 to 50 per cent over the next eight years.

Highlighting the specific impact of biofuel demand on Asia's poor, it noted that for many countries in the region, food prices are a bigger inflationary concern than oil prices.

Summing up the report's call for more political will to address the food crisis, Dr Noeleen Heyzer, UN under-secretary-seneral and Escap executive secretary, says: 'It is simply unacceptable that at a time when the economic growth of Asia and the Pacific has surpassed all expectations, we are not doing all we can to improve the lives of more than 200 million people living in such poverty.'

joannel@sph.com.sg

DOUBLE WHAMMY

'In previous oil price shocks, the impact on agriculture was only to push up costs of production. Now, with more sustained interest generated in the biofuel issue, food is not just more expensive to produce. People are also facing decreasing food supplies.'
DR M. NASIR SHAMSUDIN, agricultural and resource economist at Universiti Putra Malaysia's Faculty of Environmental Studies

NOT DOING ENOUGH

'It is simply unacceptable that at a time when the economic growth of Asia and the Pacific has surpassed all expectations, we are not doing all we can to improve the lives of more than 200 million people living in such poverty.'
DR NOELEEN HEYZER, UN under-secretary-general and Escap executive secretary