labels: Economy - general, World Bank
IMF calls for emergency measures to tackle rising food prices news
19 April 2008

Lumbar: Soaring food prices the world over can have dangerous consequences such as toppling governments and even triggering wars, the head of the International Monetary Fund (IMF) has warned.

Dominique Strauss-KahnThe price hikes that set off rioting in Haiti, Egypt and elsewhere can have ''extremely serious'' problems and "the planet must tackle it," Dominique Strauss-Kahn told France`s Europe-1 radio.

The problem could threaten even countries where the governments have done all they could to limit the impact of rising prices, the IMF chief said.

"When the tension goes above and beyond putting democracy into question, there are risks of war," he said, adding history has enough examples of such wars.

World Trade Organisation chief Pascal Lamy has called on the International Monetary Fund and the World Bank to take concerted action to tackle rising food prices.

While the rising income levels in emerging economies has been the main factor contributing to the rise in demand for food, increasing diversion of food crops for biofuels and the rising cost of oil and transportation have also contributed to food price rise.

IMF chief economist Simon Johnson has, meanwhile, warned against the increased diversion of food crops in the US and Europe in the wake of surging food prices around the world.

Demand for biofuels, along with increased competition for cropland between food and fuel uses, is taking up much of the increase in the global crop production, according to a World Bank report. Food production is failing to keep up with demand, the bank added.

Lamy also warned of a ``new form of protectionism'' among major food-producing nations, including Vietnam, India and Egypt, who have restricted exports in an effort to increase domestic availability.

On Friday, French president Nicolas Sarkozy suggested a global partnership of governments, financial institutions and the private sector to tackle rising food prices. He also said France is doubling its food aid budget this year to $159 million because 37 countries are experiencing "serious food crises."

Global food prices have risen 40 per cent since mid-2007. The increases have hit poor people the hardest, as food represents as much as 60-80 per cent of consumer spending in developing nations, compared with about 10-20 per cent in industrialised countries, the UN`s Food and Agriculture Organisation has said.

World food prices have surged nearly 83 per cent in the past three years, according to the World Bank and IMF.

The price of rice, the staple food for nearly half the world, has doubled in the past year to an all-time high.

The IMF-World Bank meeting in Washington last week sought to raise a $500 million in United Nations World Food Programme for easing food shortages and stabilising markets.


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IMF calls for emergency measures to tackle rising food prices