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Home / The Country

Rising costs spark global food fight

Heather Stewart
Observer·
18 Feb, 2007 04:00 PM2 mins to read

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KEY POINTS:

Tortilla riots in Mexico, onion protests in India, and Venezuelan supermarkets threatened with nationalisation unless they slash prices. The soaring cost of basic foods is provoking fury among consumers around the world.

"It's a global trend," says Kona Haque, senior commodities editor at the Economist Intelligence Unit.

The
price of corn, the key ingredient of the tortilla, has risen by more than 80 per cent in the past year and wheat is up by more than 40 per cent.

Poor growing conditions, including a drought in Australia, are one reason, but Haque says another key factor has been Washington's drive to reduce US dependence on oil by increasing the use of corn-based ethanol as a fuel.

Analysts have warned for some time that corn prices would start to move in tandem with global oil markets, as demand for ethanol increased and farmers turned fields over to filling US fuel tanks instead of Mexican tables.

There are also likely to be painful knock-on effects for livestock farmers, who use grains to feed their animals.

Tens of thousands of people have protested in Mexico City at the high cost of tortillas, forcing President Calderon to promise a price freeze.

In India, where the economy is growing firmly and inflation is strong, the Agriculture Ministry has suggested it could step in to cap the cost of food, after widespread protests over the cost of onions.

And in Venezuela, left-wing President Hugo Chavez has accused shopowners of hoarding food, and warned that unless they reduce prices, the Government will take them over.

- OBSERVER

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