Global food prices skyrocket

On December 29th, the UN Food and Agriculture Organization of China issued a warning that the price of food has risen to a dangerous level globally. The prices of wheat, corn and rice are about to exceed the warning level. From June to November this year, the total price rose by 26%. The highest point since 2008. If governments do not intervene, the food crisis will erupt in 2011 and may even cause a political crisis.

Cracking down speculation to control oil prices In India, the onion crisis is fermenting. The rate of price increase is now calculated in weeks. Up to 12.13% of the food inflation rate is putting pressure on India's economic growth. The price of the cheapest onion product has trebled. In recent days, Indians took to the streets to protest the soaring prices of basic foods such as onions and accused the government of doing nothing. For this reason, the Indian government, which was forced to accept helplessness, intends to intervene to interfere in the rise in food prices. Indian Minister of Agriculture Paval said recently that it will provide 5 million tons of edible grains through the welfare system to help the poor, and promised to stabilize the price of onions within the next three to four weeks. Specific measures include the indefinite ban on the export of onion and onion products. Encourage domestic businesses to import large quantities of onions from abroad and to combat hoardings by wholesalers.

The "New York Times" reported that food prices have skyrocketed and that a "vegetable basket" crisis may occur in the world in the coming year, which will increase the pressure on major food importing countries such as the Philippines, Mexico, Pakistan and Nigeria. Whether or not a global food crisis occurs in 2011 depends first and foremost on whether the short-term price interventions of various governments are effective, and intervention must be based on combating speculation. If necessary, Russia and India can learn to ban the export of products; the second is to stabilize oil prices. Rising oil prices will certainly increase food production costs. Reuters forecasts that the oil price may rise to 84 US dollars per barrel in 2011. The United States is the world’s second-largest corn exporter. Once oil prices continue to rise, oil-related agricultural products may rise by 70%.

Foreign capital infiltrated into China's grain market According to the “Market Watch” report, starting from March 2010, China’s corn prices have gradually increased in the context of greater demand than supply, even following the footsteps of mungbean and garlic and other agricultural products. In the first 7 months of 2010, China's corn imports increased 56 times year-on-year, with imports reaching 282,000 tons. Temporary reserve corn prices in Northeast China, the main corn producing area in China, continue to rise, and food processing companies, trading companies, and feed and aquaculture companies have staged a looting battle. In response to this phenomenon, speculators in the United States and Argentina began to deploy in China.

"Bloomberg Business Weekly" quoted international food policy analysts as saying that the Chinese corn market may repeat the mistakes of soybeans. In 2008, the price of soybeans in China soared. Foreign low-priced genetically modified soybeans took the opportunity to enter the Chinese market, taking away China's pricing power for soybeans. According to the latest statistics, the current dependence on China's soybeans has reached as high as 78%. Now, with the exception of corn, the foreign seed industry groups have started to grab the Chinese market with low-priced corn seeds. Analysts fear that the United States will eventually use GM maize to open the Chinese market. The pace of foreign investment in Chinese agriculture has accelerated. If this situation continues, the stability of China's agricultural prices will certainly be affected.

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