Food prices: feared factor

Many feared it - a repeat of the 2008-like riots in Egypt because of food prices. But no one would have imagined an uprising of such a generous magnitude.
Food prices may not be the sole reason for the riots that took place earlier this year in Egypt, but are believed to be a key reason for floating up the apprehensions of the masses.
The domino effect that inundated other Middle East countries such as Libya, thereafter, dwarfed the intensity of the Egyptian revolt.
The fears persist. As does the spiralling effect on other commodities, especially food. The record-breaking FAO index for February - 236 points - is a testimony to that.
Rising oil prices, stoked by unrest in the Middle East, have played their part well by making bio-fuels more attractive, as highlighted by some IMF economists, "In 2010...the production of corn-based ethanol absorbed some 15 percent of the global corn crop."
Mighty oil also makes its importance felt through rising cost of food production since it is used extensively in the agriculture cycle - from being an input for producing fertilisers and lubricating agricultural machinery, to fuelling the shipping and distribution of the produce.
Can there be a better phrase than vicious cycle for this?
Yet, oils was not a solo performance in the saga of rising food prices. Of greater concern are evolving patterns of food consumption, which present the risk that the increase in prices is more a rend than a temporary effect.
The IMF highlighted the more expensive tastes of consumers in emerging markets, towards consumption of richer food categories such as dairy products and meat. Unsurprisingly, the 4 percent surge in the dairy price index - the highest amongst all categories of the FAO food index - adds weight to the IMFs claim.
The impact from climatic changes - also feared to be persistent by many - has been amply highlighted as far as food prices go. But stockpiling is the new culprit to emerge.
The Reuters quoted FAO economist, Abdolreza Abbassian, as saying, "Stockpiling by some major grain importers eyond countries normal needs seeking to head off political unrest and secure supplies on domestic markets, has been adding uncertainty and volatility to the markets."
The underlying highlight, much to everyones apprehension, is that rallying food prices are here to stay.
Supply-side stimuli will come to the rescue of this escalation due to changing consumption patterns, but "this will take time counted in years rather than months", as said by the IMF.
No wonder analysts polled by Reuters expect food prices to keep the northward momentum up until 2015.
Time to value your dinner more than you ordinarily would.