U.N. group warns of potential 'food price shock'

The Food and Agricultural Organization said Wednesday that the world faces a "food price shock" after the agency's benchmark index of farm commodities prices shot up last month, exceeding the levels of the 2007-08 food crisis. The warning from the U.N. body comes as inflation is becoming an increasing economic and political challenge in developing countries, including China and India, and is starting to emerge as a potential problem in developed nations. Abdolreza Abbassian, a senior economist at the FAO in Rome, said that the increase was "alarming" but that the situation was not yet a crisis similar to 2007-08, when food riots affected more than 30 poor countries, including Haiti, Bangladesh and Egypt. "The world faces a food price shock," he said, adding that a prolonged spike could lead to a food crisis. The FAO said that its food price index - a basket tracking the wholesale cost of commodities such as wheat, corn, rice, vegetable oils, dairy products, sugar and meat - jumped to 214.7 points, exceeding the peak of 213.5 set in June 2008. Abbassian said that agricultural commodities prices would probably rise further. "It will be foolish to assume this is the peak," he said...more