Commodity Price Surge Sets Stage for Global Food Crisis in New Year

Here we go again

By Barry Grey
WSWS.org

The price of traded food staples such as wheat, corn and rice soared 26 percent from June to November, nearing the peaks reached during the global food crisis of 2008, according to the Food Price Index kept by the United Nations’ Food and Agriculture Organization. The price surge has continued in December, with foodstuffs and basic commodities hitting new highs and expected to climb further in 2011.

In 2008, riots broke out in at least a dozen countries as food prices hit record highs. The new surge in prices promises to unleash even greater hunger and deprivation, and more widespread social unrest, as hundreds of millions of people around the world contend with the impact of the ongoing recession and government austerity measures.

According to the UN Food and Agriculture Organization, 925 million people worldwide suffered from hunger in 2010, an increase of about 150 million since 1995-97. One third of children in the so-called developing world are malnourished.

The new explosion in commodity prices is being fueled by the cheap credit policies of governments and central banks in Europe, Japan and, above all, the United States, where core short-term interest rates remain near zero. These policies, most critically the renewed turn by the US Federal Reserve to so-called “quantitative easing,” are designed to boost national stock markets and business profits by providing the banks and corporations with virtually free credit.

The Federal Reserve in November announced that it would purchase $600 billion in US Treasury securities by, in effect, printing dollars. This cheap-dollar policy has the effect of debasing the world’s primary trading and reserve currency, thereby fueling inflationary tendencies around the world and increasing the flow of hot money to emerging economies with faster growth and higher interest rates.

The impact is vastly destabilizing and exacerbates global economic imbalances. It also provides banks, hedge funds and corporations with wide vistas for speculation on commodity prices.

In the US alone, corporations and banks are sitting on some $3 trillion in cash which they refuse to invest in production and hiring. A good portion of the global surfeit of cash is being used to ramp up the prices of commodities―from oil, copper, cotton, gold and silver to food staples such as wheat, corn, rice and soybeans.

Natural disasters are also playing a role. Drought in the Black Sea region cut Russia’s wheat harvest by a third this year. Unusually hot and dry weather in Argentina and other Latin American crop exporting nations is threatening to further reduce the volume of corn, wheat and soybeans on world markets.

Read full post at WSWS.org

2 responses to “Commodity Price Surge Sets Stage for Global Food Crisis in New Year

  1. Pingback: Didn’t we just do this? « Sky Dancing

  2. And the bottom line to all of this is that it is being doen on purpose as it is the fully revealed agenda of the New World Order.

    Homo Vishnu Amerikanus is an endangered species off for shearing and slaughter.

    Good luck to all the cotton candy brains who wouldn’t pay attention–who went along to get along, who ate themselves to 300 lb gila monsters sitting on their couches watching Dancing With The Stars and American Idol.

    Stupid is as stupid does Miss American Pie.
    ww

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