World food prices are at an all time high. The Food and Agriculture Organisation of the United Nations, FAO, has warned of the possibility of serious social unrest and food shortages.

The Economist’s food price index is at its highest level since it began in 1845! The FAO has also warned of the potential for food shortages for the first time since the 1970s due to the increases in prices.

China saw the biggest food price rises in 2007, 18%, but eggs and meat have increased in price by almost 50%. In Sri Lanka the price of food has increased by 17%, Pakistan and Indonesia 16%, Russia and Latin America, more than 10%. However without government intervention prices would have increased even more.

In China, three people were killed in a stampede when a supermarket offered cheap cooking oil for sale. Increased food prices have also caused riots and mass protests in Mexico, Yemen, West Bengal in India, Burkina Faso and Senegal. In Morocco, 50 people were injured by the police on a protest against rising food prices.

This new food crisis is taking place at a time when 854 million people, one in six of the world’s population, already don’t have enough food. In the midst of capitalist globalisation and a boom in the world economy in recent years, another four million people, join the ranks of the starving and malnourished every year.

Worst hit over the last year are the poor in countries that import a large proportion of their food. In Mauritania, where the cost of imported food has doubled this year, one person was killed and 17 wounded in riots in November. Globally, the cost of imported food has increased 21% this year. Other places with high proportions of imported food are Nepal, Bangladesh, Bolivia, Jamaica and Sub-Saharan Africa. From all these areas, reports warn of the danger of increased hunger for the population.

The biggest and most spectacular price increases have been on grains and pulses. From May to September 2007, the world price of wheat doubled, from $200 per tonne to $400. The price of maize has increased by 50% this year, rice by 20% to an all time high and soya beans also by 20%.

There are several coinciding reasons that have caused the price hikes. One-third of the maize harvest this year in the US, which is the biggest food exporter in the world, is going to the production of biofuels instead of food. A full tank of ethanol in a SUV uses the equivalent amount of maize that would produce bread and food for one person for a year, according to the World Bank. Catastrophic floods have hit 57 countries in 2007. Drought and fires have reduced harvests in some countries, for example Australia and parts of Brazil.

Drought and the spread of deserts are predicted to half the harvests in the worst hit countries in Africa in the next 12 years. The increased price of oil is affecting the cost of food production, transport and the price of fertilisers, due partly to increased demand particularly from China and India. For a number of years, cheap commodities from China have lowered world prices and kept inflation down. Now, China’s strong demand is instead raising world prices for oil and raw materials, including food. Meat consumption in China, according to The Economist, has increased from 20 kilos per capita in 1985 to 50 kilos this year.

In many countries, governments have been using up their stockpiles of food, which are now at their lowest levels in 35 years. These measures will only have a short term impact, holding back price increases for a limited period, whilst the depletion of these stockpiles means governments will face further problems trying to deal with future crises.

Neo-liberalism has given even greater powers to the huge multinationals. In many parts of the world local food production facilities have been closed down and poor countries which used to export food have now become major importers. Food has become another commodity for the super rich to speculate on and make huge profits, whilst millions die from hunger.

Rising food prices are an important factor behind the world-wide increase in inflation. With the growing fear of a financial crash and a sharp drop in the value of the dollar, central banks now face a dilemma. Banks and speculators are demanding lower interest rates to cut the costs of their borrowings. However this raises the risk of increasing inflation even further. Whatever the central banks decide to do we will see crises in the next period during which governments around the globe will place the burden onto the working class and poor.

To control the price and supply of food requires democratic planning. This can only take place if the food multinationals are publicly owned. Then resources could be distributed so that everyone could have access to affordable nutritious and healthy food and the environment would not be destroyed by the production methods of the profit-hungry food multinationals.