World on track for record food prices 'within a year' due to US drought

They are being driven upwards by the climb in grain and oilseed prices as US crops weather the country's worst drought since 1936, while the farming belts of Russia and South America suffer through similar water shortages. What we are seeing represents the third major rally in global grain and oilseed prices in just half a decade.

Worse is to come, new research warns. World food prices look set to hit an all-time high in the first quarter of next year – and then keep rising, according to the analysis from Rabobank, a specialist in agricultural commodities. By June 2013, the basket of food prices tracked by the United Nations could climb 15pc from current levels, according to the bank's analysts.

"The coming year will see the world economy re-enter a period of agflation as grain and oilseed stocks decline to critically low levels, pushing the FAO [Food and Agricultural Organisation] Food Price Index above record nominal highs set in February 2011," they say. Read more >>

Anger on the bayou is palpable

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"The whole place is full of oil."
Barataria estuary now ground zero in oil spill
The meandering sand dunes and bird islands of Barataria Bay have become the epicenter of the environmental disaster spewing from BP's offshore well. And fishermen are bitter.

Oil-caked birds, stranded sea turtles, globs of gooey brown crude on beaches, coated crabs and mats of tar have been found throughout the inlets and mangroves that dot the bay. The oil has smothered this watery otherworld with a rainbow sheen and is threatening the complex web of wetlands, marshes and bayous that make up this national treasure.

Everything from crabbing to bait fishing is shutting down, and the anger on the bayou is palpable.

"It's scary, you know, man," marine mechanic Jimmy Howard said from his ramshackle and hurricane-battered fishing shack, a cigar stub stuffed in his mouth. "I see them doing what they can, you know. All the boats going out, all the boom. I'm hoping they can contain it."

Barataria teems with wildlife, including alligators, bullfrogs, bald eagles and migratory birds from the Caribbean and South America. There are even Louisiana black bears in the upper basin's hardwood forests.

Before the Deepwater Horizon explosion on April 20, oyster and shrimp boats plowed through these productive bays as fishermen snapped up speckled trout and redfish within minutes of casting their lines.

Now it resembles an environmental war zone. Many of the bay's nesting islands for birds are girded by oil containment boom, and crews in white disposable protective suits change out coils of absorbents to soak up the sticky mess.

"The whole place is full of oil," said fishing guide Dave Marino. "This is some of the best fishing in the whole region, and the oil's coming in just wave after wave. It's hard to stomach, it really is."

At the entrance to Barataria, dredges and bulldozers are building sand berms on barrier islands to intercept the advancing oil. National Guard helicopters drop sandbags into breaches smashed through the islands by hurricanes, and local officials are moving in barges to use as makeshift barriers.

Shrimp boats have been enlisted in the skimming effort _ the Coast Guard says about 2,450 barrels of oily water have been picked up. But it's bittersweet work for the shrimpers, whose fishing grounds have been shut down. More...

Nine Countries to Replace US Dollar

Nine countries of ALBA, a leftist bloc conceived by Venezuelan President Hugo Chavez, met in Bolivia where they vowed to press ahead with a new currency for intra-regional trade to replace the US dollar.

"The document is approved," said Bolivia's President Evo Morales, who is hosting the summit.

The new currency, dubbed the Sucre, would be rolled out beginning in 2010 in a non-paper form. That move echoes the European Union's introduction of the euro precursor, the ECU, an account unit designed to tie down stable exchange rates between member states before the national currencies were scraped.

ALBA's member states are Venezuela, Bolivia, Cuba, Ecuador, Nicaragua, Honduras, Dominica, Saint Vincent and Antigua and Barbuda. The currency, which was backed in April this year, is named after Jose Antonio de Sucre, who fought for independence from Spain alongside Venezuelan hero Simon Bolivar in the early 19th century.

The bloc also called for the replacement of the World Bank's International Centre for Settlement of Investment Disputes, which arbitrates international contract disputes and has probed a slew of disputes involving ALBA members and western energy firms. Most ALBA members have already withdrawn from the organization, with Ecuador announcing last July that it would pull out of the group.

On Friday Bolivian media reported the country intents to nationalize a electricity distribution firm owned by Spain's Red de Electrica de Espana. It is just the latest in a series of nationalizations in Venezuela, Ecuador and Bolivia.

In May, Venezuela nationalized 74 energy services firms operating in the oil-rich Maracaibo Lake region. Bolivia's Evo Morales has indicated that parts for his country's energy and rail sectors will be nationalized.
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