UN Blames Falling Dollar and Investment Funds for Rising Food Prices

A story from Reuters on why world food prices have been rising dramatically in recent weeks. The fact that prices have been rising due to the falling dollar is not a surprise as this topic has been discussed with respect to rising oil prices. However, the fact that investment funds have been helping to raise food prices is news to me, although perhaps not as surprising as it should be.

Global investment funds and the weak dollar are largely to blame for high world food prices, a senior official of the United Nation's Food and Agriculture Organization said on Thursday.

"The crisis is a speculative attack and it will last," said Jose Graziano, the UN food and farm organization's regional representative for Latin America and the Caribbean.

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Across the globe foods from bread to milk have become more expensive and in some countries helped fuel inflation. High prices for rice, beans and other food staples provoked food riots in Haiti this week.

"The lack of confidence in the (U.S.) dollar has led investment funds to look for higher returns in commodities ... first metals and then foods," Graziano told a news conference in the capital.

Investors have speculated in commodities including wheat, corn and rice because stocks in recent years have been drawn down by rising demand in emerging markets and supply shortages due to adverse climate in key producer nations, Graziano said.

"Speculative attacks become possible when you have low reserves," Graziano said.

Stocks of some food crops have fallen to their lowest levels in three decades, according to Brazilian farm experts.