There are many reasons for the current high global food prices. In addition to rising crude oil prices and excessive bioenergy expansion, South American countries believe that there are two major reasons. First, the policy of agricultural subsidies in developed countries has caused huge impact on agriculture in developing countries. Agricultural production has shrunk, food sovereignty has been lost, and dependence on imported grain has become a reliance. Second, a large amount of international speculative funds has flooded into commodity futures markets, involving rice. Food prices such as wheat, corn and soybeans continue to soar.
When Argentina’s President Cristina and Brazilian President Lula spoke at the summit, they all pointed out that the global food crisis was not unrelated to the US subprime mortgage crisis. A large amount of international speculative funds first speculated on real estate, created a financial bubble and a subprime mortgage crisis, and then withdrew from the financial market, rushed into the commodity futures market, and raised the price of grain to “unimaginable heightsâ€.
Since the 1990s, Latin American countries have successively experienced financial crises and suffered painful lessons. Since then, Latin American countries have successively carried out economic reforms and strictly controlled financial risks. For this reason, the impact of the subprime mortgage crisis in the United States last year on Latin American countries was relatively limited. Latin American financial markets experienced only short-term shocks and the economy of the entire region remained relatively stable.
In peace when thinking. At present, South American countries are very worried that the global food crisis will pose a great threat to South American economic growth and social stability. Brazilian President Lula stated that the Latin American economy itself does not have the factors that cause the crisis, but the external crisis may cause Latin American countries to be implicated and affected by the domino effect.
The global food crisis has caused South American countries to increase their export revenues from agricultural products. At the same time, inflationary pressures in these countries have also increased, and the number of poor people has increased dramatically. In addition, the imbalance in the agricultural structure of South American countries, the growing area of ​​a few crops such as soybeans, and the decline in the output of other crops. Analysts said that once the bubble in the international agricultural product market is punctured and the prices of soybeans and other agricultural products fall sharply, the losses and blows to agriculture in the South American countries will be unthinkable.
Because of this, South American countries, the world's major agricultural production bases, are highly vigilant against the skyrocketing global food prices. They hope to be able to plan ahead and promote the international community to join hands in speculative capital activities to combat speculation and avoid the burst of the food price bubble in South America. financial crisis.
Venezuelan President Chavez also proposed to set up a regional fund to deal with the food crisis at the summit to help countries and low-income groups affected by the food crisis. This initiative has attracted the attention and response of the participating leaders.
However, South American countries are also aware that the global food crisis has brought great opportunities for the development and expansion of agricultural products in the region. Countries such as Brazil, Argentina, Uruguay, and Paraguay are the world's major food-producing regions. The substantial increase in agricultural product export revenues has enabled these countries' economies to maintain a relatively high growth rate and reduce the negative impact of the slowdown in economic growth in the United States.
In fact, agricultural production in South American countries still has great potential for growth, but there is a problem of insufficient investment. At present, the number of foreign capital entering South American countries continues to increase. Foreign businessmen purchase large areas of cultivated land in the South American region. Through the introduction of advanced farming techniques to increase production, the company has made considerable profits.
In short, for South American countries, the rise in global food prices is both a crisis and an opportunity. If we can properly deal with and guard against risks, we can not only promote the agricultural production and exports of South American countries, but also alleviate the global food crisis.
The 35th MERCOSUR summit ended on July 1 in Tucumán, a northern city in Argentina. One of the highlights of the meeting was that the leaders of the South American countries realized the risks and development opportunities brought by the global food crisis to the South American countries, curbing speculative capital activities worldwide and expanding agricultural production and exports became the common strategic choice for South American countries.