U.N. Says World Vulnerable To Food Crises (Source: CME)
The world has become increasingly vulnerable to food crises in the wake of the global financial crisis and the commodity boom of 2007-08, the United Nations' food body said. In its flagship report, the Food and Agriculture Organization said while world food prices fell after spiking in 2008, they remain elevated and volatile, a situation likely to continue owing to rising production costs, growing demand from biofuels and pressure on supplies from a rapidly-expanding population. "The experience of the food price and financial crises have provided a sharp reminder of the vulnerability of world food security to shocks in the global food system and the world economy," said the report. Some food prices have more than doubled this year after weather problems in key producers curbed the global production of wheat, corn, cotton and sugar.
The FAO's food-price index rose 2.2% on month in February, the eighth-consecutive monthly rise, to the highest level in real and nominal terms since the FAO started monitoring prices in 1990, according to data from the body. Charities warn the rising cost of staple foods could push the number of chronically-hungry people in the world above 1 billion, as happened in 2009. "Millions more people are sliding into poverty as they struggle to afford basic food supplies and more and more are at risk of going hungry," said Oxfam's food-policy adviser Thierry Kesteloot. The FAO report said that with global food consumption outpacing supply, "prices are projected to increase over the next decade and to continue to be at levels, on average, above those of the past decade." World food production, as measured by the FAO's production index, is forecast to have grown 0.8% in 2010 after rising 3.8% in 2008 and 2.6% in 2007, as producers responded to the high prices of the food crisis.
Global food consumption, which has been rising at an average of around 2% a year, was only marginally dented by the recession, the FAO said. Trade in food is expected to have contracted again in 2010 after increasing 4%-6% annually before the financial crisis. "Episodes of high prices are detrimental to food security, and the high uncertainty associated with price volatility affects producer viability and may lead to reduced agricultural investments," said the report. Problems such as climate change are also expected to leave markets more vulnerable to shocks: the number of Asian countries affected by food crises doubled from five a year in 1981-2002 to 10 in 2003-2009, for example. "Since the mid-1980s, the general trend has been towards an increase in the number of countries affected by emergencies," the report said. In the face of such growing pressure, the FAO said governments must boost investment in agriculture.
It highlighted that closing the gender gap in agricultural production by empowering women could potentially boost developing countries' output by 2.5%-4% and feed an extra 100-150 million starving people. "The recent food and financial crises, the uncoordinated policy responses and continuing fears over global food-market turmoil have underscored the need for action by the international community," it said.
China Commerce Minister: Developed Economies Enjoy Edge In Food Market Due To Agricultural Subsidies (Source: CME)
China is studying lowering tariffs to increase imports and will unilaterally cut import tariffs from less-developed countries, Commerce Minister Chen Deming said. Speaking at a briefing during the National People's Congress, the annual meeting of China's legislature, Chen said China attaches great importance to expanding imports from the U.S. and views rebalancing bilateral trade with the world's largest economy as the key to resolving its overall trade surplus.
He added that trade deficits can't be ruled out for "a few months" this year, but China's trade surplus as a share of gross domestic product will likely fall. China's export growth will likely slow, in part due to fluctuating currencies, rising commodities prices, and higher labor costs, Chen said.
UN Agency: 2.7 Mln People In Arab Crisis May Need Food Aid (Source: CME)
An estimated 2.7 million people will need food aid as a result of the political turmoil sweeping the Middle East and North Africa, the United Nations' relief agency said, as it launched an appeal to help refugees from the Libyan crisis. The World Food Program said it is calling for a total of $43.2 million in aid to assist 1.1 million people directly affected by the Libyan crisis, adding that it has staff pre-positioned to enter the country once access is possible. "Libya faces a humanitarian crisis following an unprecedented level of upheaval and violence," it said in its latest crisis update. "The current outlook for the country...is that the humanitarian situation will continue to deteriorate." More than 200,000 mostly migrant workers have fled to bordering countries, including Tunisia and Egypt, in a bid to escape violence in Libya. Humanitarian agencies estimate up to 6,000 people may have died since mid-February following a violent crackdown on rebel groups by forces loyal to Moammar Gadhafi.
Libya's crisis is the latest in a wave of revolutionary unrest sweeping the Arab world which has toppled the long-standing presidents of Tunisia and Egypt and threatened many of the region's autocratic regimes. The WFP said it has already provided food aid for more than 35,000 people near the Egyptian and Tunisian borders and is making preparations to deliver aid for a further 29,000 in the coming days. The U.N. estimates 400,000 people will leave Libya due to the crisis. Still, as violence continues the WFP said the repercussions are likely to escalate. "As the recent political upheavals in Egypt and Tunisia have exacerbated their already weakened social safety net systems, WFP may need to expand assistance to target an estimated 2.7 million people," it said.
U.S. employment rebounds from winter gloom
WASHINGTON, March 4 (Reuters) - U.S. employers hired workers at the fastest pace in nine months in February and the jobless rate slipped to a nearly two-year low of 8.9 percent, showing the economy is finally kicking into a higher gear.
Nonfarm payrolls increased 192,000, the Labour Department said on Friday, partly bouncing back from a weather-depressed January as private employers hired 222,000 workers, the most since April. The gains were broadly in line with expectations.
China targets inflation as fiscal priority
BEIJING, March 7 (Reuters) - China will ensure that big increases in spending on social priorities from public housing to health care do not aggravate inflationary pressures that it has been trying to suppress, the finance minister said on Monday.
What's more, China will use its fiscal policies to boost production of grain, cotton and food as a way of reining in prices, Finance Minister Xie Xuren said at a news conference held during China's annual national parliament session.
S.Korea: economy in recovery, price pressure up
SEOUL, March 7 (Reuters) - Brisk domestic demand and exports have been shoring up the South Korean economy, but stronger raw material prices are raising inflationary pressure, the Finance Ministry said in a report to the parliament on Monday.
The report comes just before the Bank of Korea convenes its monthly rate-setting meeting on Thursday, after it surprised markets by standing pat in February following an unexpected hike by 25 basis points to 2.75 percent in January.
China urges other nations to accept rare earths position
BEIJING, March 7 (Reuters) - Economies that have come to depend on China for rare earths metals should accept that Beijing has real environmental concerns that make curtailing exports necessary, the Chinese Commerce Minister Chen Deming said on Monday.
China produces about 97 percent of the global supply of rare earth minerals used in smartphones, electric car motors and high-tech industrial equipment. Beijing cut export quotas by 40 percent last year, alarming buyers and trading partners.
PRECIOUS-Gold climbs to record as Mideast violence flares
LONDON, March 7 (Reuters) - Gold climbed to a record high above $1,440 an ounce on Monday as the threat of violence spreading in the Middle East and North Africa pushed oil prices to 2-1/2 year highs and burnished the metal's safe-haven appeal.
"There is all sorts to support gold -- high oil prices, low real interest rates, and the fact that there are constant reminders that we still have debt problems in Europe," said Standard Bank analyst Walter de Wet.
FOREX-Euro jumps to 4-mth high vs dlr on ECB rate view
LONDON, March 7 (Reuters) - The euro jumped to a four-month high against the dollar on Monday as expectations of a euro zone interest rate hike next month helped it vault back above $1.40 and investors shrugged off a ratings downgrade of Greece.
"Sentiment is bullish at the moment and we could see a test of the 1.4080/00 area," said Richard Wiltshire, chief foreign exchange dealer at ETX Capital.
Argentina issues permits for delayed grains shipments
BUENOS AIRES, March 5 (Reuters) - Argentina's government said on Saturday it had granted export permits to allow grains shipments delayed at ports after President Cristina Fernandez dissolved the state agency in charge of the multibillion-dollar farm trade last week.
The dissolution of the ONCCA agency, which farm leaders accused of corruption and inefficiency and which was responsible for authorizing export permits, delayed shipments and generated uncertainty among exporters.
Oil at 2-1/2-year high, world stocks retreat
LONDON, March 7 (Reuters) - Crude oil prices jumped to a 2-1/2-year peak as worries about supply disruption increased due to widening clashes in Libya, while world stocks fell on concern sustained high oil prices could hurt growth. "Investors are still nervous. The one thing they hate is uncertainty and the Middle East situation is providing plenty of uncertainty," said Keith Bowman, analyst at Hargreaves Lansdown.
