Nestle Predicts Unrests to Spawn Rising Global Food Prices

Fast-changing consumption habits and a host of other factors could further push up food prices, according to a global food firm, which added that rising costs could spawn uprisings in many countries around the world.

Such incidences were recorded in Asia, Africa and in some Caribbean nations on 2008 and there could be a recurrence in the near future, according to Nestle chair Peter Brabeck-Letmathe, who observed that food riots and other related violence have become new realities as global food prices spiral upward almost without let up.

Brabeck-Letmathe noted that severely affected by the alarming situation are countries from the developing regions, where most inhabitants "spend 80 percent of your income on food then of course you are going to feel it more than here (in Europe) where it is maybe eight percent."

"We have reached a level of food prices that is substantially higher than before ... It will likely settle down at this level," the Nestle chief was quoted by AFP as saying.

Nestle, which currently stands as the number one food processor and manufacturer in the world, has reported that prices of cereals, meat products and other basic commodities have seen spiking levels most notably in 2008.

That trend continued on mostly in the North African region, which experts said contributed to the swelling unrests that resulted to the toppling of governments one after another that were highlighted by the exit of the long-serving regimes of Hosni Mubarak in Egypt and Moammar Gadhafi in Libya.

This year alone, the United Nations has reported that food price index reached a record high of 237.7 points in February before settling to 225 points last month, which according to AFP was tad higher on the level registered in June 2008, in which time food riots were seen in some African countries.

Unrests due to rising food prices, the UN said, also gripped the impoverished nations of the Philippines in Asia and Haiti in the Caribbean.

According to Brabeck-Letmathe, food prices surge due largely to rising consumptions especially in the case of China and India, where both nations' emerging middle classes are purchasing more food products than they used in the previous years and decades.

He added that ballooning population, climate change and commodity market speculation all contribute to the soaring levels of food prices yet most noteworthy at this point is the way we utilise our water supply, Brabeck-Letmathe stressed.

The Nestle chair lamented that we are "using more water than is sustainable," and to arrest that trend, governments ought to increase the price of water in hopes that household and industrial users will cut back on their present usage levels.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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