Russian fires hit global food supplies

JOHANNESBURG, South Africa, Aug. 4 (UPI) -- Drought and raging fires in Russia caused a spike in global grain price meaning the next year may be difficult on food supplies, a U.N. agency said.

At least 40 people have died and more than 2,000 were left homeless after fires scorched several regions around Moscow. Russian President Dmitry Medvedev declared a state of emergency and officials said there is no end in sight during the record heat wave.

Abdolreza Abbassian, an economist at the Intergovernmental Group on Grains at the U.N. Food and Agriculture Organization in South Africa, said the impact on grain prices could be dramatic next year.

"Any global hike takes at least six months to get transmitted to the domestic markets," he told the U.N.'s humanitarian news agency IRIN. "What it does mean is that 2011 could be a difficult one for wheat-based foods like bread."

He added the price of grain went up 20 percent last week. The heat wave and subsequent drought in Russia, one of the largest wheat exporters, has wiped out about 20 percent of its food crops.

Abbassian noted that while grain prices were skyrocketing, they weren't as high as peaks in 2008.

"At the moment the global reserves are OK but as the drought continues in Russia it will have an impact on planting for next year," he said. "It means we might need to be very, very cautious next year."