Jan. 6: The high food prices in India comes at a time of a perfect storm. Global food prices have also risen sharply over the past few months. The global food import bill in 2010 is close to the peak levels that were seen in 2008. A global food index maintained by the Food and Agricultural Organisation, a UN body, says that food prices have gone up by over 30 per cent in the past six months. Prices are also expected to remain high in 2011.
The FAO collects prices of several food groups including cereals, meat, dairy products and sugar. Prices are up in almost all these categories, partly because of a drop in the production in some key countries, FAO had observed in a recent document. Lower production also means that inventories of foodstuffs are lower — though not as low as they had reached in 2008. Apart from that, a weakening US dollar is also responsible.
Thus, importing food will become a costly option for governments such as India, which are trying to bring down high prices at home.
Apart from the high prices, costs of transportation are also up as petroleum prices have gone up in the past few months. There is also a risk that a weather pattern called the La Nina (as opposed to El Nino), may form over the Pacific Ocean, which could result in lower rains in North America, hurting food production in 2011.