South Korea unveiled steps on Tuesday to combat the threat of rising food prices, joining a flurry of activity as policymakers grow increasingly worried that inflation could derail a global recovery. Central bankers meeting under the auspices of the Bank for International Settlements warned on Monday that rising prices in fast-growing economies were an increasing menace and it was important to anchor inflation expectations.
-- Aussie floods set to push up vegetable and fruit prices
-- India cautious over food exports, Japan monitoring
-- Asia rice supply seen ample for now
The G20 also weighed in late last week, promising action to find ways to bring down high food prices, which have already pushed food inflation in countries such as Brazil, China and India into double digits and forced farmers in Indonesia to guard their high-value chilli crops around the clock.
The United Nations food agency provided an uncomfortable reminder of the 2008 global food crisis, when riots erupted in several countries and others banned food exports, by reporting last week that world food prices had risen above 2008 levels. In South Korea, where food makes up about 15 percent of the consumer price index (CPI), the government said it would increase the supply of vegetables, meats and fish ahead of Lunar New Year holidays that start at the end of January.
The government listed 16 agricultural and fish products for additional supplies after the country's President Lee Myung-bak declared a "war on prices" in the year's first cabinet meeting on January 4. Korea also said it would set up a trading company for the longer term to import grains directly. The move is part of anti-inflation measures due to be announced on Thursday after consumer prices rose in the year through December more than expected, led by food and fuel prices.
French Agriculture Minister Bruno Le Maire called for stricter regulation to avoid speculation on commodities leading to market swings. But he said the current situation was not as worrying as in 2008, thanks to a string of bumper harvests in Africa. Wheat prices rose 47 percent last year, corn more than 50 percent and US Soybeans by 34 percent. The United Nations' Food and Agricultural Organisation said in its report key grains prices could rise further.
Saudi Arabia announced it was boosting wheat reserves to cover a year instead of six months. The Kingdom suffered like other Gulf Arab states from the 2008 price spike. It has since sought to lease and buy farmland in developing nations to improve the security of its food supplies.
India farm minister, Sharad Pawar, told reporters on Monday that the government was "cautious" about exporting food since the country's food inflation jumped late in December to more than 18 percent - its highest in more than a year.