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High cost of basics fuels global food fights

This article is more than 17 years old

Tortilla riots in Mexico, onion protests in India, and Venezuelan supermarkets threatened with forced nationalisation unless they slash prices. The soaring cost of basic foods is provoking fury among consumers around the world.

'It's a global trend,' says Kona Haque, senior commodities editor at the Economist Intelligence Unit. 'We are definitely seeing price increases.'

The price of corn, the key ingredient of the tortilla, has risen by more than 80 per cent in the past year and wheat is up by more than 40 per cent.

Poor growing conditions, including a drought in Australia, are one reason for the price rises. But Haque says another key factor has been Washington's drive to reduce America's dependence on oil, by increasing the use of corn-based ethanol as a fuel. 'A lot of land is being devoted to ethanol, so prices have shot up,' she said.

Analysts have been warning for some time that corn prices would start to move in tandem with global oil markets, as demand for ethanol increased, and farmers turned fields over to filling American fuel tanks, instead of Mexican tables. There are also likely to be painful knock-on effects for livestock farmers, who use grains to feed their animals.

Tens of thousands of people have protested in Mexico City at the high cost of tortillas, forcing president Felipe Calderon to promise a price freeze.

In India, where the economy is growing firmly and inflation across the board is strong, the agriculture ministry has suggested that it, too, could step in to cap the cost of food, after widespread protests over the prohibitive cost of onions.

And in Venezuela, left-wing president Hugo Chavez has accused shop-owners of hoarding food, and warned that unless they reduce prices, the government will take them over.

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