Rising food
prices and shortages could cause instability in many countries as the
cost of staple foods and vegetables reached their highest levels in two
years, with scientists predicting further widespread droughts and
floods.

Although food stocks are generally good despite much of this year's harvests being wiped out in Pakistan and Russia, sugar and rice remain at a record price.

Global
wheat and maize prices recently jumped nearly 30% in a few weeks while
meat prices are at 20-year highs, according to the key Reuters-Jefferies
commodity price indicator. Last week, the US predicted that global
wheat harvests would be 30m tonnes lower than last year, a 5.5% fall.
Meanwhile, the price of tomatoes in Egypt, garlic in China and bread in
Pakistan are at near-record levels.

"The situation has deteriorated since September," said Abdolreza Abbassian of the UN food and agriculture organisation. "In the last few weeks there have been signs we are heading the same way as in 2008.

"We may not get to the prices of 2008 but this time they could stay high much longer."

However, opinions are sharply divided over whether these prices signal a world food crisis
like the one in 2008 that helped cause riots in 25 countries, or simply
reflect volatility in global commodity markets as countries claw their
way through recession.

"A food crisis on the scale of two or three
years ago is not imminent, but the underlying causes [of what happened
then] are still there," said Chris Leather, Oxfam's food policy adviser.

"Prices
are volatile and there is a lot of nervousness in the market. There are
big differences between now and 2008. Harvests are generally better,
global food stocks are better."

But other analysts highlight the food riots in Mozambique that killed 12 people last month and claim that spiralling prices could promote further political turmoil.

They
say this is particularly possible if the price of oil jumps, if there
are further climatic shocks – suchas the floods in Pakistan or the
heatwave in Russia – or if speculators buy deeper into global food
markets.

"There is growing concern among countries about
continuing volatility and uncertainty in food markets," said Robert
Zoellick, president of the World Bank. "These concerns have been compounded by recent increases in grain prices.

"World
food price volatility remains significant and in some countries, the
volatility is adding to already higher local food prices."

The
bank last week said that food price volatility would last a further five
years, and asked governments to contribute to a crisis fund after
requests for more than $1bn (£635m) from developing countries were made.

"The food riots in Mozambique can be repeated anywhere in the coming years," said Devinder Sharma, a leading Indian food analyst.

"Unless
the world encourages developing countries to become self-sufficient in
food grains, the threat of impending food riots will remain hanging over
nations.

"The UN has expressed concern, but there is no effort to
remove the imbalances in the food management system that is responsible
for the crisis."

Mounting anger has greeted food price inflation
of 21% in Egypt in the last year, along with 17% rises in India and
similar amounts in many other countries. Prices in the UK have risen 22%
in three years.

The governments of Kenya, Uganda, Nigeria,
Indonesia, Brazil and the Philippines have all warned of possible food
shortages next year, citing floods and droughts in 2010, expected
extreme weather next year, and speculation by traders who are buying up
food stocks for release when prices rise.

Food prices worldwide
are not yet at the same level as 2008, but the UN's food price index
rose 5% last month and now stands at its highest level in two years.

World
wheat and maize prices have risen 57%, rice 45% and sugar 55% over the
last six months and soybeans are at their highest price for 16 months.

UN
special rapporteur on the right to food, Olivier de Schutter, says a
combination of environmental degradation, urbanisation and large-scale
land acquisitions by foreign investors for biofuels is squeezing land
suitable for agriculture.

"Worldwide, 5m to 10m hectares of
agricultural land are being lost annually due to severe degradation and
another 19.5m are lost for industrial uses and urbanisation," he says in
a new report.

"But
the pressure on land resulting from these factors has been boosted in
recent years by policies favouring large-scale industrial plantations.

"According to the World Bank, more than one-third of large-scale land acquisitions are intended to produce agrofuels."

But the World Development Movement
(WDM) in London warned that food speculation by hedge funds, pension
funds and investment banks was likely to prompt further inflation.

According to the US Commodity Futures Trading Commission,
speculators on the trading floor of the Chicago Exchange bought futures
contracts for about 40m tonnes of maize and 6m tonnes of wheat in the
summer.

Longtime hedge fund manager Mike Masters, who has worked
with WDM, said: "Because there is already much more capital available in
the world than hard commodities, speculators can increase the price of
consumable commodities, like foodstuffs or energy, much higher than
traditional consumers and producers can react.

"When derivative
markets are linked to commodity markets, this nearly unlimited capital
from the financial sector can cause excessive price volatility."