"Will there be a 'vegetable basket crisis' next year?"

Since December 29, 2010, the Food and Agriculture Organization of the United Nations has warned that food prices around the world have risen to a dangerous level. The prices of wheat, corn, and rice are about to exceed the warning line. From June to November this year, they rose by 26%, soaring to the highest point since 2008. If governments of various countries do not intervene, a food crisis may occur in 2011, which might even lead to political crises.

Crackdown on speculation to control oil prices

In India, the onion crisis is brewing. The speed of price increases is now calculated weekly, with a food inflation rate as high as 12.13%, putting pressure on India's economic growth. The cheapest ingredient, onions, have quintupled in price. In recent days, Indian citizens have taken to the streets to protest the skyrocketing prices of basic foods like onions, accusing the government of inaction. For this reason, the Indian government, left with no choice, plans to intervene in the rising prices of food. Indian Agriculture Minister Pawar recently stated that 5 million tons of edible grains will be provided through the welfare system to assist the poor, and promised to stabilize onion prices within the next three to four weeks. Specific measures include an indefinite ban on the export of onions and onion products, encouraging domestic merchants to import large quantities of onions from abroad, and cracking down on wholesalers hoarding goods.

The New York Times reported that the sharp rise in food prices could lead to a basket-of-goods crisis worldwide in the coming year, increasing pressure on major food-importing countries such as the Philippines, Mexico, Pakistan, and Nigeria. Whether a global food crisis will occur in 2011 depends first on whether short-term price intervention measures by governments of various countries are effective. Intervention must focus on combating speculation, and if necessary, can learn from Russia and India to prohibit product exports; secondly, it is about stabilizing oil prices. Rising oil prices will certainly increase the cost of food production. A Reuters forecast survey showed that oil prices may rise to $84 per barrel in 2011. The United States is the world's second-largest corn exporter. Once oil prices continue to rise, agricultural products related to oil may increase by 70%.

Foreign capital infiltrates China's grain market

According to MarketWatch, starting from March 2010, against the backdrop of demand exceeding supply, China's corn prices gradually increased, even following the path of mung beans and garlic among other agricultural products. In the first seven months of 2010, China's corn imports increased by 56 times year-on-year, reaching 282,000 tons. The temporary reserve corn prices in Northeast China, the main corn-producing area, continue to rise, and grain processing enterprises, trading companies, as well as feed and livestock enterprises have already begun a fierce competition for corn. In response to this phenomenon, American and Argentine speculators have started deploying in China.

Bloomberg Businessweek previously quoted international food policy analysts as saying that China's corn market might repeat the mistake made with soybeans. In 2008, China experienced a surge in soybean prices, during which foreign genetically modified soybeans entered the Chinese market at low prices, seizing China's pricing power over soybeans. The latest statistics show that China's dependence on imported soybeans has reached as high as 78%. Now, besides corn, foreign seed groups carrying low-priced corn seeds have begun entering the Chinese market en masse. Analysts are concerned that the U.S. will eventually use genetically modified corn to open up the Chinese market. Foreign capital is accelerating its infiltration into Chinese agriculture. If this situation continues, the stability of China's agricultural product prices will definitely be affected. (Editor-in-Charge: admin)