MercoPress. South Atlantic News Agency

Bolivia will appeal to Central bank reserves to stockpile food staples

President Evo Morales had to cancel his participation in an event fearing food protests

Bolivia prepared to tap its record 10 billion US dollars in central bank reserves to help boost agricultural production and stockpile food staples as a hedge against a looming global “food crisis” Finance Minister Luis Arce said.

President Evo Morales cancelled Tuesday his participation at an event in the mining city of Oruro after protests against sugar shortages and rising transport prices threatened to turn violent, state-run news agency ABI reported. Bolivian consumer prices accelerated 1.76% in December from November, the biggest monthly jump since May 2008. In January it was down to 1.29%.

Accelerating inflation caused by rising food prices is becoming a global problem, Arce, 47, said in an interview in La Paz.

“The Bolivian state for the first time will produce food in order to stock it” Arce said. “We are looking at a food crisis that is coming.”

Bolivia’s central bank reserves should be used to increase loans to producers and lower prices, Arce said. The government also plans to create a state-run company to store wheat, corn, soybeans and rice, he said.

Annual inflation in Bolivia reached 7.18% last year, exceeding a July forecast by the country’s central bank that prices would rise 3% to 5% in 2010 compared with a 0.26% increase in 2009.

Corn prices rallied to a 30-month high for a second day Tuesday on signs of increasing global demand for supplies from the US, the world’s biggest grower and exporter. Sugar prices jumped the most in a week while wheat hoarding may become “widespread” as production trails demand, Abdolreza Abbassian, a senior economist at the UN Food and Agriculture Organization, said in an interview.

The US State Department estimates there were more than 60 food riots worldwide from 2007 to 2009, when food costs hit record highs.

Bolivia’s central bank reserves surpass the 7 billion US dollars the country needs and “will be used to increase agricultural production, start lithium mining projects and invest in energy”, anticipated Arce.

“We have land,” Arce said. “We think that we can use part of the reserves, but only for production projects, like food, energy, electricity and lithium”.