Tuesday 14 August 2012
Last Update 17 August 2012 2:40 pm
The Kingdom would not be affected by the looming food crisis as witnessed in some parts of the world, assured an official source.
“The impact of the expected shortage of food material in 2013 will be limited in the Kingdom because of long term purchase agreements made by the Kingdom’s traders and the country’s strategic food reserves,” an official said in a statement to Al-Eqtisadiah daily.
The Food & Agriculture Organization of the United Nations’ (FAO) forecast of global rice production for 2012 has been lowered by 7.8 million tons, mainly because of the reduced rains in India.
“If at all there is a crisis such as exorbitant pricing, the government is expected to step in with subsidies to bring down consumer prices, as happened in the case of rice in the past which is one of the major basic items locally,” he said.
Saudi Arabia stopped subsidies for rice in Dec. 2009 only after international prices had steadied and with an understanding with importers. The Saudi government had subsidized rice imports at SR 1,000 per ton over three years.
The FAO report said the price of rice in the international market is currently stable, but it is worried about the future. “The supply and stocks of rice have been abundant, but the future direction of rice prices remains uncertain,” the report said.
The official source expected that the demand for rice would be down in the international market because of the economic crisis and environment upheavals in Europe and America.
He said this was speculation on what might happen in the future, but what mattered was the state of demand and supply in the market.
The world price index for food commodities jumped an alarming 6 percent in July (compared to June) while cereal prices jumped an average of 17 percent, according to the FAO report.
The report also warned of a likely repeat of the food price crisis of 2008 that led to riots and demonstrations in over 30 countries.
Another FAO concern was that scientific warnings that climate change could lead to a decline in food production were already becoming a reality. Extreme weather events, such as the heat wave and drought in the US and the floods in China, the Philippines and Pakistan, have been linked to climate change as well as being the driving force behind the spike in food prices.
The US Department of Agriculture lowered its estimate of this year’s corn output from 13 billion bushels down to 10.8 billion bushels, a drop of 2.2 billion bushels.
International wheat price quotations have risen by 19 percent amid worsening production prospects in Russia, as have expectations for the further demand for wheat to be used as animal feed as a replacement for corn in light of falling supplies.
The uncertain prospects for supplies and prices of some foods have revived the controversy over the increased use of crops for bio-fuels instead of food.
FAO Director-General José Graziano da Silva last week called on the US to change its policy by temporarily lifting its present mandate that 40 percent of its corn be used for making ethanol. Many organizations have been critical of the diversion of land for the production of crops used for bio-fuels as opposed for food.
This conflict of alternative uses of land is bound to be more acute when food supplies are reduced due to weather conditions and climate change, and as the demand for food increases.
Many countries that had produced their own food and were even net exporters had experienced an agricultural decline as their governments withdrew their support for farmers and the food sector as a condition for obtaining structural adjustment loans from the World Bank and IMF.
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