declining home values

UN warns on food price inflation

Pakistani women at subsidised food store 03.03.08

Governments are urged to take action to help ease rising prices

The head of the UN World Food Programme has warned that the rise in basic food costs could continue until 2010.Josette Sheeran blamed soaring energy and grain prices, the effects of climate change and demand for biofuels.

Miss Sheeran has already warned that the WFP is considering plans to ration food aid due to a shortage of funds.

Some food prices rose 40% last year, and the WFP fears the world’s poorest will buy less food, less nutritious food or be forced to rely on aid.

Speaking after briefing the European Parliament, Miss Sheeran said the agency needed an extra $375m (244m euros; £187m) for food projects this year and $125m (81m euros; £93m) to transport it.

This is not a short-term bubble and will definitely continue
Josette Sheeran

She said she saw no quick solution to high food and fuel costs.

“The assessment is that we are facing high food prices at least for the next couple of years,” she said.

Miss Sheeran said global food reserves were at their lowest level in 30 years – with enough to cover the need for emergency deliveries for 53 days, compared with 169 days in 2007.

Biofuel prices

Among the contributing factors to high food prices is biofuel production.

Miss Sheeran says demand for crops to produce biofuels is increasing prices for food stuffs such as palm oil.

Miss Sheeran said governments needed “to look more carefully at the link between the acceleration in biofuels and food supply and give more thought to it”.

The WFP says countries where price rises are expected to have a most direct impact include Zimbabwe, Eritrea, Haiti, Djibouti, the Gambia, Tajikistan, Togo, Chad, Benin, Burma, Cameroon, Niger, Senegal, Yemen and Cuba.

Areas where the WFP is already seeing an impact include:

  • Afghanistan: 2.5 million people in Afghanistan cannot afford the price of wheat, which rose more than 60% in 2007
  • Bangladesh: The price of rice has risen 25% to 30% over the last three months. In 2007, the price rose about 70%.
  • El Salvador: Rural communities are buying 50% less food than they did 18 months ago with the same amount of money. This means their nutritional intake, on an already poor diet, is cut by half.
  • Anger over rising food prices have already led to riots in Burkina Faso, Cameroon, Senegal and Morocco.

    The BBC is planning a special day of coverage of this issue on Tuesday 11 March, online, on radio and on TV.

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    BERLIN — The dollar sank to a new low against the euro Wednesday on pessimism about the American economy and speculation Washington will soon cut interest rates again.

    The euro spiked to $1.4855 before retreating slightly to $1.4787 in morning European trading. It broke the $1.48 mark for the first time on Tuesday, settling at $1.4815 late in New York.

    The dollar also hit a two-year low against the Japanese yen, falling to purchase as little as 108.81 yen before rising slightly to 109.19 yen – compared with 109.69 yen in New York on Tuesday. It was last lower when it purchased 108.76 yen on Sept. 5, 2005.

    The British pound was down slightly to $2.0639 from $2.0667 in New York.

    The euro, the pound and other currencies have been climbing steadily against the dollar since August amid fears for the health of the U.S. economy, stoked by the subprime credit crisis.

    Surging oil prices – which rose to a new record high above $99 in early Asian trading Wednesday – have driven up commodity-backed currencies such as those of Canada, Australia and New Zealand.

    The dollar has been further weakened by U.S. interest rate cuts – which can be used to jump-start an economy, but can also weaken a currency as investors transfer funds to countries where they can earn higher returns.

    On Tuesday the U.S. Federal Reserve released the minutes of its October meeting and its economic forecasts for the next three years, which suggested to investors that a December rate cut was imminent given the state of turmoil in credit markets and the Fed’s forecast of decreasing inflationary risk – contributing to the dollar’s weakness.

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    Toyota’s Net Profit Rises 32%

    On Strong Sales, Weaker Yen

    August 3, 2007 7:48 a.m.

    TOKYO — Toyota Motor Corp., shrugging off an overall slowing of demand in the key U.S. market, posted a 32% rise in net profit to reach a record high in the fiscal first quarter.

    Japan’s No. 1 car maker by sales volume said demand for its fuel-efficient vehicles and luxury Lexus line boosted sales in all of its overseas markets. That led to a record net profit of ¥491.54 billion ($4.12 billion) in the April-June quarter, up from ¥371.50 billion a year earlier. Operating income grew 32% to ¥675.4 billion. Revenue rose 16% to ¥6.523 trillion.

    The profit rise came in spite of what analysts have called the slowest annual growth rate for auto sales in the U.S. since 1996, due to high gas prices, declining home values and other factors that deter consumers.

    But customers continued to flock to fuel-efficient models such as the RAV4 crossover and the Prius gasoline-electric hybrid. Toyota says it sold 762,000 vehicles in the region, up 2% from last year.

    “We’re not expecting the U.S. market to go down substantially,” Takeshi Suzuki, a Toyota senior managing director said at a press conference Friday.

    Toyota also did well in the crowded pickup truck market, where it had a rough start. Taking a cue from its Detroit rivals, it offered discounts of as much as $3,500 on its redesigned Tundra full-scale pickup. The incentives helped boost sales, but accounted for a significant chunk of its ¥100 billion world-wide marketing budget. The company says that the high-margin Tundra brings in robust profits despite the incentives, and significantly contributed to a 14% rise to ¥160.2 billion in operating profit in North America.

    The weak yen, which increases the value of overseas earnings when converted into the Japanese currency, also contributed to the rise in profit in North America.

    The U.S. push by Toyota and other Asian auto makers has won them market share at the expense of American makers. Earlier this week, analysts reported that combined market share for the big Detroit brands, including Chevrolet, Ford and Chrysler, in July fell below 50% for the first time.

    Honda Motor Co. said last week that demand for fuel-efficient cars in the U.S. boosted its quarterly profit. Nissan Motor Co., meanwhile, reported a drop in profit due to a backlog of big, gas-guzzling vehicles that it can’t sell in the U.S.

    Toyota has also been rapidly expanding in fast-growing emerging markets such as China, India and Russia. In Asia (excluding Japan), its sales increased by 13% to 222,000 vehicles, driven largely by a brisk sales in China and Indonesia.

    World-wide, the company sold 2.16 million vehicles in the quarter, up 3% from 2.091 million last year. The rise will help Toyota meet its goal of selling 8.89 million vehicles in the year ending March 31, 2008, and possibly inch beyond General Motors Corp. to become the world’s biggest car maker by sales volume this calendar year.

    Toyota, valued at $215 billion, is already the world’s most valuable and profitable car maker. One weak spot for Toyota was Japan, where sales fell 8% to 500,632 vehicles. New car sales have been consistently declining in Japan, due largely to an aging population.

    As Toyota expands, it must confront problems with quality control and production. In 2005, the car maker recalled 2.38 million vehicles in the U.S., slightly more than it sold, due to quality problems. It has since delayed introducing new models by as much as six months in order to work out engineering and design kinks.

    After an earthquake damaged one of its key suppliers last month, Toyota had to shut down production at 12 of its plants in Japan for several days, resulting in a loss of output of 60,000 vehicles. The company says it will make up for the loss during holidays and that it will not have an impact on earnings.

    Toyota kept its annual forecasts for the fiscal year ending March 31, 2008. It predicted a net profit of ¥1.650 trillion, up 0.4% from ¥1.644 trillion, and a group operating profit of ¥2.250 trillion, a 0.5% rise.

    Write to Amy Chozick at