New research warns higher food costs caused by Ukraine could spark wars and uprisings in Middle East. A surge in the price of wheat and the rising cost of food have raised the risk of conflicts spreading globally and the possible reawaken of the Arab Spring uprisings in the Middle East. This is the latest warning on the impact that rising commodity prices arising from instability in Ukraine could have on security and the global economy from leading British academic Aled Jones, director of Anglia Ruskin’s Global Sustainability Institute. The threat for the coming year is that, should global crop production be impacted by severe weather, as we have seen increasingly in recent years, the impact of the crisis in Ukraine could result in a major supply demand imbalance in global food trade, said Mr Jones. This would trigger major volatility in the price of food. If this happened, already fragile countries could further destabilise.” Russias annexation of Crimea and dispute with Ukraine has pushed wheat prices 13pc higher this month amid fears that supplies of key agricultural commodities from Europes bread basket could be disrupted. According to Anglias Global Resource Observatory project: A variety of factors, such as political regime and social tensions, will influence whether a country falls into unrest. However, a trigger event such as food shortages, coupled with costly imports, often precipitates conflict. High food costs were a major underlying factor behind the Arab Spring uprisings in 2010, which saw regime change in Tunisia, Egypt and Libya. Researchers from the university say that almost four years after the start of the Arab Spring, the Middle East remains vulnerable to the global price of food. Risks to rising commodity prices other than Ukraine include extreme climatic events such as the cold weather experienced in North America this winter and droughts across Brazil could also have a major role to play, according to the research. Meanwhile, Macquarie has revised upwards in price forecasts through to 2015 for some major soft food commodities such as coffee and wheat. The bank said on Thursday that: Adverse weather conditions (affecting coffee, sugar, palm oil and soybeans), together with political instability in the Black Sea region (supporting corn and wheat), led to sharply higher commodity price moves. Funds have covered their short positions and are now net long in anticipation of potential supply disruptions ahead. Macquaries MacPI agricultural commodity index has moved sharply higher since the beginning of the year, climbing 6.3pc in February and 3.9pc in March. Although the average price of a basket of groceries in the UK has so far been unaffected by Ukraine crisis the Bank of England has warned that the dispute with Russia could put pressure on prices for key commodities such as grain and gas. telegraph.co.uk/finance/commodities/10711239/Ukraine-food-squeeze-threatens-to-trigger-war-and-new-Arab-Spring.html
Posted on: Fri, 21 Mar 2014 07:24:49 +0000
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