Food hoarding by governments keen to keep prices low is pushing prices higher

Food hoarding by governments keen to keep grocery bills low – and stave off political discontent – could end up pushing food prices much higher, economists warn

Attempts by countries to restrict exports of food staples at times of high prices also drive prices higher Photo: ALAMY


Attempts by countries to restrict exports of food staples at times of high prices also drive prices higher.

Recent weeks have seen a series of governments buy staple crops such as wheat and rice in bulk on the market to build up a buffer of supplies against future price rises.

But governments who buy early only inflate the market and bring rises forward, in what traders term a “concertina effect”.

Attempts by countries to restrict exports of food staples at times of high prices also drive prices higher and can deepen a food crisis the United Nations said this week.

The body’s Food and Agriculture Organisation (FAO) warned that governments’ clumsy efforts to manipulate the market in 2008 only made that year’s food price crisis worse.

Richard China, director of the FAO’s policy and programme development support division, said, “The experience of the 2007-2008 food crisis shows that in some cases, hastily taken decisions by governments to mitigate the impact of the crisis, have actually contributed to or exacerbated the crisis and aggravated its impact on food insecurity.”

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