KATHMANDU: The world economy has witnessed chaos after chaos with tremendous change in the last couple of years and these changes have seen governments fall, the balance of world economic power shared but now a bigger threat emerges that is bound to rattle the governments of the world with the ever rising food prices. Global alarm over a potential repeat of the 2008 food crisis escalated after the US drought, arguably the worst in half a century, devastated crops in the world’s largest economy with no signs of easing.
Corn, the second largest produced crop in the world, followed by maize and wheat, has reached a record high with prices surging more than 60 per cent in the past two months as the US reels from eccentric weather.
In today’s world of interlinked markets, a problem in one place quickly ripples out to others. The decline in food production is likely to be a multi-year cycle with the effect of rising price observed worldwide. The fact is that the poorest of the poor — those who spend the largest proportions of their daily wage on food — are hardest hit.
Economists warned that high food prices have driven people around the world into poverty and global food prices are now
at dangerous levels which is causing pain and suffering around the globe. The dilemma is that the central bank’s monetary
policy can offer no help in miti-gating this risk since it is caused by the external shock, that is, weather induced price hike.
To counter this impending problem, the G-20 member countries plan to hold a conference call in the last week of August to discuss a meeting that could be held in late September or early October. The member nations are trying to identify the problems and coordinate
a collective response to the escalating food crisis.
Despite aggravating problems around the world, policymakers are comforted by several factors. One is that the price of rice, a key commodity for food security in Asia, remains stable. Global demand is also less strong than in 2007-08 due to the impact of the financial
crisis in economic growth.
(The author is the manager of business development department at Mercantile Exchange Nepal Ltd. She can be contacted through