Are food price controls on the horizon?
Elsewhere, Mexico is trying to control the price of tortillas, and Venezuela is capping prices on staples including milk and sugar. Malaysia is setting up a National Price Council to monitor food costs and is planning stockpiles of major foods, as well as a 24-hour hot line for consumers to vent about food costs.
These measures reflect the mounting pressure on developing economies as food costs rise sharply. Food-price inflation is running at an 11 percent annual rate in major developing countries, up from about 4.5 percent in 2006, according to Bank of America Corp. The price rises partly reflect increased demand from emerging markets and higher oil prices, which drive up the cost of growing and transporting food.
Economists warn that price controls encourage hoarding and can lead to supply shortfalls, fueling unrest. Perhaps the biggest disadvantage of price controls, however, is that they short-circuit potential changes in behavior by producers and consumers that might damp the underlying causes of inflation. If price controls are kept in place too long, economists say, odds increase for a precipitous and destabilizing jump in prices.
|Printer friendly Cite/link Email Feedback|
|Publication:||Food & Drink Weekly|
|Date:||Feb 11, 2008|
|Previous Article:||Food safety officials and scientists concerned about variety of food-based outbreaks.|
|Next Article:||EU food labeling proposal draws criticism.|