In the spotlight - the spectre of rising food prices returns: Food news & analysis

In the spotlight - the spectre of rising food prices returns: Food news & analysis: "Global food prices are at a record high again, only two years or so after the last dramatic price spike sparked food riots and heightened the debate worldwide over food security. While there is alarm, analysts appear less worried about the current situation than they were in 2008. Food manufacturers, however, may beg to differ. Ben Cooper reports.

The spectre of sky-high food prices is back with a vengeance with serious implications for consumers, for governments attempting to shepherd economies through a fragile recovery period and not least for food manufacturers.

With the shock of the financial crisis, the worrying spike in food prices in 2008 may have faded from the memory somewhat but recent months have brought it back to mind all too clearly. The recent adverse weather in Australia and Brazil and the downgrading of crop forecasts in the US has heightened anxiety further.

In fact, according to the UN's Food and Agricultural Organization (FAO) the current spike has taken global food prices higher than the 2008 surge. The UN's Food Price Index, which tracks monthly price fluctuations across the dairy, meat, sugar, cereals and oilseed markets, averaged 214.7 points in December, against 206 points in November and 213.5 points at its previous record high in June 2008.

The chief catalyst behind the rise has been sugar, cereal and oil price increases, with high sugar prices particularly influential. The 2008 spike resulted in considerably greater focus being paid to the issue of food security and arguably having a further price surge in such a short timeframe will only heighten those concerns further.

However, the FAO suggested that the current situation does not represent a crisis, citing the fact that the price of rice, the staple of 3bn people in Asia and Africa, remains well below its record high, and the situation has not sparked the widespread food riots in developing countries seen in 2008.

In an interview with the Financial Times, FAO senior economist Abdolreza Abbassian stressed that from a global food security perspective rice and wheat are the critical commodities and not sugar, oilseeds or meat, though he added that it would be 'foolish' to assume prices had reached their peak.

Other analysts have also played down the current situation. Analysts at Credit Suisse pointed out that the situation in 2007/2008 had been exacerbated by governments in countries such as India and Vietnam imposing export restrictions on rice. 'The estimated global and exporting countries' stock-to-use ratios of both wheat and rice are considerably higher today than in 2007-08, making shortages and drastic export bans unlikely, in our view,' Credit Suisse said.

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