Washington, Jan 10 : Strategists have warned that the world is seeing the emergence of a new crisis - a global food catastrophe, that will reach further and be more crippling than anything the world has ever seen.
A report in ENN (Environmental News Network) has stated that the credit crunch and the reverberations of soaring oil prices around the world will pale in comparison to the scenario of acute food shortage.
Donald Coxe, global portfolio strategist at BMO Financial Group, explained the reason for this impending disaster.
According to him, the sharp rise in raw food prices in the past year will intensify in the next few years amid increased demand for meat and dairy products from the growing middle classes of countries such as China and India, as well as heavy demand from the biofuels industry. This not only impacts the price of food products made using grains, but also the price of meat, with feed prices for livestock also increasing. "You're going to have real problems in countries that are food short, because we're already getting embargoes on food exports from countries, who were trying desperately to sell their stuff before, but now they're embargoing exports," said Coxe, citing Russia and India as examples. The solution to this approaching problem is the importance of expanding the food output.
"The greatest challenge to the world is not US$100 oil; it's getting enough food so that the new middle class can eat the way our middle class does, and that means we've got to expand food output dramatically," Cox told ENN.
The impact of tighter food supply is already evident in raw food prices, which have risen 22% in the past year.
But, according to Coxe, this surge would begin to show in the prices of consumer foods in the next six months.