UN: Food prices hit record high in February

Associated Press

ROME

Global food prices are the highest in 20 years and could increase further because of rising oil prices stemming from the unrest in Libya and the Mideast, a U.N. agency warned Thursday.

Skyrocketing food prices have been among the triggers for protests in Egypt, Tunisia and elsewhere, and raised fears of a repeat of the food price crises in 2007 and 2008.

Some experts point to key differences compared with those years: For one, the price of rice, a dominant component of regular diets in many parts of the world, is much lower today. Still, aid group Oxfam called the hike “deeply worrying.”

The Food and Agriculture Organization said in a statement that its food-price index was up 2.2 percent last month, the highest level since January 1990 when the agency started monitoring prices.

It also was the eighth- consecutive month that food prices had risen, the Rome-based agency said. In January, the index already had registered a record peak.

The increase was driven mostly by higher prices of cereals, meat and dairy products, FAO said. Sugar was the only commodity of the groups being monitored whose price hadn’t risen.

Global oil prices, which increased on concerns about the potential impact of supply disruptions after unrest in Libya, are a crucial variable.

“Unexpected oil-price spikes could further exacerbate an already precarious situation in food markets,” said David Hallam, director of FAO’s trade and market division.

Oil prices affect food markets in many ways, from production to transport costs. When oil prices are high, there is a bigger incentive to produce alternative fuels such as ethanol, which is made from crops such as corn. Increasing demand for alternative fuels made from crops drives up food prices.