Food Prices Fuel Egypt Unrest
NEW YORK (TheStreet) -- Rising food prices not only helped ignite civil unrest in Egypt, Tunisia, Yemen and other developing nations in recent weeks, but threaten to curb global business operations by pressuring margins and disrupting the world's oil supplies.
Tensions may have eased Tuesday amid hopes for a peaceful resolution to the crisis and an expected end to President Hosni Mubarak's 30-year rule, but food inflation -- a major catalyst to the region's instability and call for change -- is unlikely to go away anytime soon.
The United Nations' Food and Agriculture Organization (FAO) said its index of global food prices was at record highs, spiking 25% internationally in 2010, higher even than where the index was in 2007-8 during the last food-price inflation crisis. The trend was a major topic of debate and concern among the global economists, political leaders and corporate executives who assembled in Davos last week for their annual meeting of minds.
Rising food prices "can topple regimes, as we have seen in the Middle East," said New York University economics professor Nouriel Roubini, participating in a panel discussion in Davos.The gap between rich and poor in Egypt continued to widen, just as in other nations -- both developing and developed -- around the world. "With the county's history of a more even income distribution and the recent rise in food prices, this rising income inequality may be becoming more of an issue," wrote The Oil Drum, an energy, peak oil and sustainability think tank facilitated by the nonprofit Institute for the Study of Energy and Our Future. "The most important issue from the current Middle East tensions is what it means for oil prices," Nicholas Colas, ConvergEx Group's chief market strategist, told TheStreet. World oil production remains essentially flat, leading oil prices higher, which in turn means the cost of producing, storing and transporting food is on the rise.
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