Extreme Weather Helps Drive Food Prices to New Highs

The United Nations' top food agency announced yesterday that world food prices hit a record high last month, igniting concerns among agricultural experts who are thinking back to the food riots that gripped developing countries just three years ago.

"It's a worrisome situation with prices this high," said Dan Gustafson, the director of the U.N. Food and Agriculture Organization's Washington, D.C., office. "The year ahead is what I think is the real concern at this point. ... It's not by any means inevitable that prices will come down," he said.

The food price index from the Rome-based U.N. agency measures the price fluctuations for commodities including cereals, dairy, meat, sugar and oilseeds.

Last month's average food price index came in at 215, whereas the peak in 2008 was 213.5. In December 2009, the figure was only 172.

The recent high is the culmination of a steady increase in prices over the past six months. It marks the highest food price index since food price figures were first recorded 30 years ago.

FAO attributes the upswing in prices to factors including the crop failures caused by a string of extreme weather events and high crop demands from an ever-increased global population. Many experts have linked the series of floods and fires with climate change.

"We can never tell if any particular weather event is impacted by climate change, but I can say there is every expectation we will see more of these weather events in the future and that these events certainly have an impact," said Jerry Nelson, a senior research fellow coordinating climate change work at the International Food Policy Research Institute.

Russian wildfires, Australian drought raise wheat prices
Wheat, for example, bludgeoned by Russia's wildfires, the heat waves in Australia and flooding in Pakistan, saw massive price surges last fall.

"The record rise in food prices is a grave reminder that until we act on the underlying causes of hunger and climate change, we will find ourselves perpetually on the knife's edge of disaster," said Gawain Kripke, policy director for Oxfam America, in a statement.

While high prices for sugar and oil were the key drivers for the high food index average, Gustafson pointed out that agricultural commodity prices -- although also high -- are still 13 percent below the peak June 2008 prices.

That may be a saving grace for the national security of developing countries that are heavily dependent on cereals as a food staple, he said. The price increases have also happened fairly gradually in the developing world, compared to what was seen in 2008 -- helping stave off riots, he said.

"The expectation is that food prices won't go down in the next six months," said Gustafson. "The margin of error if something goes wrong with prices this year is not very big," he said.

This food price news comes on the heels of new data on the cost of oil, which closed at more than $90 a barrel earlier this week.

"The last time we had a spike in food prices, it was related to increased oil prices, and that's because oil is an input into food for the production price," said Michael Livermore, executive director of the Institute for Policy Integrity.