Restricted credit and access to foreign exchange may lead farmers to cut production, worsening agricultural price pressures. From the Financial Times:
The world might face a repeat of this year’s food crisis as the credit crunch encroaches on the agricultural market, leading farmers to cut their planting because of falling prices and lack of finance to buy fertilisers, the United Nations warned on Thursday.“Riots and instability could again capture the headlines,” the Food and Agriculture Organisation said.
The warning was made despite a fall in the price of most agricultural commodities as farmers harvest bumper crops…
“Under the current gloomy prospects for agricultural prices, high input costs and more difficult access to credit, farmers may cut their plantings, which might again result in a tightening of world food supplies,” the FAO said in the report….
Concepción Calpe, a senior economist at the FAO in Rome, said a price surge might take place in the 2009-10 harvesting season, “unleashing even more severe food crises than those experienced recently”.
Lower production and higher prices next year could add to developing countries’ problems in obtaining sufficient credit and foreign exchange to buy agricultural commodities. “Export finance is becoming more difficult to obtain, with banks tightening up the conditions for issuance of letters of credit,” the FAO said.
Thailand and Iran agreed last month to barter rice for oil, the clearest example yet of how the financial crisis, high fuel price and scarcity of food are reshaping global trade.
In spite of the continuing fall in food prices, the world’s food imports’ bill is set to surge above $1,000bn (€785bn, £633bn) for the first time ever, up 23 per cent from last year and 64 per cent higher than in 2006, the FAO said.
Developing countries will spend $343bn this year on food imports, up a record 35 per cent from last year’s $254bn. Some poor countries, the organisation said, were curtailing food imports in an effort to lower their bills.
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Two weeks ago I started reading this blog and now wonder at its validity. Has every one posting here just gone delusional to the cause and effect of the currant market position? Just for giggles start with Citibank and credit cards and their move to Idaho in the late 70s for a better a market environment. Now look at their contracts in market place evolution or the 2% solution it worked! The gloves were off in regards to bank/lender customer relationship as the lender could do almost any thing to the customer. Well if it worked for the credit card world why not the rest IE home loans and beyond. The trust is gone for good now and everyone will have to pay the tab. I’ve worked at the international level for 35 years and have seen the slide in into this morass coming for a long time now. Remember slick types as we are only 200 years plus the beginnings of the industrial revolution and we are still just kids at this game. Stability is all ways preferable to unchecked expansion as you have a ground game you can work with and not have to rely on a Crystal ball. Hell in my field quotes are a joke as the price is always driven down at the cost of quality only to haggle the price of the job a second time to meet standards. What a mind job to contend with building nuclear power plants BTW coming to your town soon! KISS Keep it simple stupid! Do we really need to create a system of wealth/economy base on the uniformed suckers?