IFPRI:Failed Indian Monsoon Risks Raising World Food Prices

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Aug. 20 – India has enough grain stocks to ride out a poor harvest, but the failure of the monsoon adds to global uncertainty about food and grain stocks, the head of the International Food Policy Research Institute (IFPRI) told Reuters yesterday.

Director general, Joachim von Braun cautioned that uneven rainfall across India this summer has raised concerns over global food prices. Rainfall has been 29 percent below normal since the beginning of monsoon season and has triggered a sharp rise in food prices in India and overseas sugar futures.

While the Indian government has stated it has enough reserves to meet domestic shortfalls, von Braun stated that globally “the international community will have to draw down stocks and this will make the international markets for food commodities and grains more nervous. It is very difficult to rebuild stocks from the low levels we have.”

In April, IFPRI reported that rich nations have bought agricultural land, particularly in Africa, to guard against food shortages. The report recommended that standards of transparency and ethics in the acquisitions must be implemented to prevent displacing the locals and exporting food during a crisis.

According to India’s The Economic Times, the land acquisitions were triggered by a spike in agricultural prices in 2008. Moreover, high energy prices triggered greater interest in biofuel, that caused many countries to limit exports and build domestic reserves.

Foreign funding for overseas land usually come from hedge funds, private businessmen, state-owned corporations and government. Von Braun said that between one-third and one-half of the overseas land deals studied by IFPRI were bought for growing crops for biofuels.

“It’s systematic, it’s there to stay, and it shouldn’t surprise us. The undermining of trust in trade through the export bans of last year… has not been forgotten,” Von Braun told The Economic Times. “It was a huge failing of the world trading system.”

Further Reading

The 2009 Monsoon Arrives, Affecting India to China