Agriculture Organisation (FAO), in Rome, on Thursday, warned that the world could face a food crisis of the kind experienced in 2007/08 if countries restrict exports on concerns about a drought-fueled grain price rally.
It will be recalled that a mix of high oil prices, growing use of biofuels, bad weather, soaring grain future markets and restrictive export policies pushed up prices of food in 2007/08, sparking violent protests in countries including Egypt, Cameroon and Haiti.
Concern about extreme hot and dry weather in the United States (US) sent corn and soybean prices to record highs last month, driving overall food prices higher again and reversing the FAO's forecast for declines this year.
According to the senior economist and grain analyst of the organisation, Abdolreza Abbassian, "there is potential for a situation to develop like we had back in 2007/08.
"There is an expectation that this time round, we will not pursue bad policies and intervene in the market by restrictions, and if that doesn't happen, we will not see such a serious situation as 2007/08. But if those policies get repeated, anything is possible."
A number of major producers imposed various restrictions on exports, in an attempt to control domestic prices in the 2007/08 crisis, including outright ban as well as quotas or higher tariffs on exports of foods, including rice, corn and wheat.
Markets drew a little comfort from comments of Russian official on Wednesday that the country saw no grounds to ban grain exports this year, but did not rule out protective export tariffs after the end of the 2012 calendar year.
In its monthly index update, the FAO said its food price index, which measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar, averaged 213 points in July, up by six per cent from 201 points in June.
It said the US drought, the worst to hit the Midwest in 56 years, had pushed up corn prices by almost 23 per cent in July, while international wheat prices had followed, rising about 19 per cent amid worsening output prospects.
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