India, Philippines caught in world food pressures

Karon Snowdon

Last Updated: Fri, 4 Feb 2011 21:39:00 +1100

Bananas - $3 a kilogram at a fruit shop in Sydney, Australia, early last week - had reached reached $8 by Friday. Soon the tropically grown fruit may soar to $15 a kg as bad weather hits crops.

Harsh weather, including Australia's cyclone Yasi and earlier floods, is continuing to push up world food prices.

Wealthy western consumers worrying about bananas are not faring nearly as badly as people in poorer nations.

World food prices hit a record high in January after rising for a seventh consecutive month.

Highest

The United Nation's Food and Agriculture Organisation (FAO) says its Food Price Index averaged 231 points - the highest level since they began measuring prices in 1990.

Already there have been rallies in southern India to demand the government control spiralling prices.

India has some of the highest inflation in the world, and food price inflation is a major element in the equation. It has averaged 15 per cent for the past two years.

Adit Jain, chairman of market researchers IMA-India, says it is a complex picture. "I think the problem of food inflation will persist," he told Radio Australia's Asia Pacific.

"I don't think there has been any significant improvement in food output, specifically vegetables (and fruit)."

There has also been a substantial increase in Indian demand, largely, says Mr Jain, because government economic schemes have successfully created more jobs and people who once could not afford to eat some foods were now part of the broader consumer society.

FAO economist Abdol Reza Abbassian said poor weather in Australia, Pakistan and Russia were part of the problem for world food prices in the year to January.

"We had quite an extraordinary year in 2010." And he says poorer nations suffer most as prices rise.

Now cyclone Yasi in Australia's tropical north has made things worse. With much of the sugar and banana crops destroyed, prices for both commodities - domestically and for any exports - are set to soar.

Already sugar is at a 37-year record.

Adam Elawaad, who owns a fruit shop in Sydney, says wholesale prices are skyrocketing.

Hopes

"A box of 12 kilo, we were paying $28 on Wednesday, yesterday we pay $65," he said on Friday.

But it is good news for some. Philippines banana growers are hoping to cash in with renewed efforts to export their fruit to Australia.

Yet despite the severe shortage, Australian Banana Growers Association president Cameron Mackay does not welcome that prospect.

He says quarantine restrictions should continue to apply.

"Them coming in would jeopadise our industry completely, you know. They've got pests and diseases over there we don't have that would absolutely annihilate our industry, make a cyclone look like nothing."

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