Rising Food Prices Contribute To Unrest In Mideast

Food prices have been rising dramatically in the Middle East, as well as other parts of the world. A U.N. report shows its food price index is at the highest level ever recorded. Surging prices for cereals, rice, sugar, coffee and more have contributed to the political and social unrest in Egypt, Tunisia and Yemen.

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Among the many forces driving political unrest in Egypt, Tunisia and other countries is the rising cost of food. Prices for wheat, corn, rice, sugar, coffee and other basics have been surging. A U.N. report shows its food price index is at the highest level ever recorded. Food subsidies in Egypt have helped tamp down some of the anger there, but concerns are growing along with prices.

NPR's Chris Arnold reports.

CHRIS ARNOLD: In the past six months, the price of wheat and corn has nearly doubled in many parts of the world. And in areas where people spend as much as half their income on food, that's making it very hard for people to feed their families.

This is at least part of what's driving the desperation and anger that's sending people out into the streets of Cairo, such as this protester who spoke to Al-Jazeera.

Unidentified Man: (Through translator) We are tired, ma'am. We are tired. Stop the price hikes. We are suffering. We are Egyptians. We love Egypt. But stop this. We want to eat. We want to live, we and our children.

ARNOLD: Across a continent in the snow-covered city of Davos, Switzerland, economist Nouriel Roubini spoke to CNN.

Dr. NOURIEL ROUBINI (Chairman, Roubini Global Economics): What has happened in Tunisia is happening right now in Egypt. And also, riots in Morocco, Algeria, Pakistan are related not only to high unemployment rate and to income and wealth inequality, but also to this very sharp rise in food and commodity prices.

ARNOLD: So why are food prices rising so quickly? One reason is that bad weather has ruined crops in many parts of the world. There have been floods in Australia and Pakistan. Extreme heat last summer in the U.S. hurt corn production. Russia was hit by a severe drought last summer.

Chris Hurt is an agricultural economist at Purdue University.

Professor CHRIS HURT (Agricultural Economist, Purdue University): The former Soviet Union countries, now 12 countries in the former Soviet Union, ended up with 29 percent reduction in total wheat production versus last year. Now, that region is actually the largest exporter of wheat to the world. And Russia, one of the major countries, shut off wheat exports totally, would not ship any wheat out of the country.

ARNOLD: Canada also had a disappointing wheat crop.

Meanwhile, as the world's economies have been improving, there's been more demand for food and other commodities. Add all that together, more demand, less supply, and prices have to go up.

Prof. HURT: As an example, on corn, we've seen those commodity prices increase about 75 to 80 percent, wheat has increased about 75 to 80 percent in the last six months, and rice has gone up about 50 percent. So in those countries that are very close to a grain-based diet, you can see double-digit increases in their food cost very, very quickly.

ARNOLD: Here in the U.S., you don't see it as much. If you buy a can of Wolfgang Puck corn chowder, the price of corn is obviously just a tiny amount of the cost of putting that food on the shelf. There's a lot more money spent on advertising and packaging.

But in developing countries, where people buy a burlap sack full of cornmeal or flour to feed their families, spikes in food prices are felt much more.

Chris Hurt.

Prof. HURT: There are many, many people on the Earth, billions that are very vulnerable to these both high prices and wide swings in prices.

ARNOLD: Some experts don't want to overstate the role that food prices are playing in the current uprisings in North Africa and the Middle East.

Mr. ABDOLREZA ABBASSIAN (Senior Economist, United Nations' Food and Agriculture Organization): The problem is deeper than this.

ARNOLD: Abdolreza Abbassian is a senior economist with the United Nations' Food and Agriculture Organization. He tracks food prices around the globe.

Mr. ABBASSIAN: It's adding fuel to the fire, that's for sure. But whether it is what has sparked that situation that is unfolding, I personally doubt it very much.

ARNOLD: Abbassian says the reality is, that back in 2007 and 2008, food prices actually rose even higher when you look at just the most basic staple crops: corn, wheat and rice. He says this time around, there were actually pretty big reserves of those on hand and that has cushioned the price increases. But he says if we see another bad year with more drought and flooding...

Mr. ABBASSIAN: It is quite an alarming situation if it continues for long.

ARNOLD: The rising food prices are also rekindling controversy over fuel policies that mandate the use of grains for ethanol production in the U.S. and biodiesel in Europe. In 2010, nearly 40 percent of the corn grown in the U.S. went to make ethanol. Some experts say that's helping to restrict the supply of food on the world market.

Chris Arnold, NPR News.

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