Nations turn to barter deals to secure food, By Javier Blas over at FT Options

[Mr P]

http://www.ft.com/cms/s/0/3e5c633c-ebdc-11...00779fd2ac.html

Countries struggling to secure credit have resorted to barter and secretive government-to-government deals to buy food, with some contracts worth hundreds of millions of dollars.

In a striking example of how the global financial crisis and high food prices have strained the finances of poor and middle-income nations, countries including Russia, Malaysia, Vietnam and Morocco say they have signed or are discussing inter-government and barter deals to import commodities from rice to vegetable oil.

The revival of these trade practices, used rarely in the last 20 years and usually by nations subject to international embargoes and the old communist bloc, is a result of the countries’ failure to secure trade financing as bank lending has dried up.

The countries have not disclosed the value of any deals, and some have refused even to confirm their existence. Officials estimated that they ranged from $5m for smaller contracts to more than $500m for the biggest.

Josette Sheeran, head of the United Nations’ World Food Programme, said senior government officials, including heads of state, had told the WFP they were facing “difficulties” obtaining credit to purchase food. “This could be a big problem,” she told the Financial Times.

While food prices have fallen from their record high last year, this fall is only temporary, a study by Chatham House, the London-based think-tank, suggests.

Last week, Malaysia’s commodities minister, Datuk Peter Chin Fah Kui, said Kuala Lumpur had already signed a barter deal swapping palm oil for fertilizer and machinery with North Korea, Cuba and Russia. He said Malaysia was talking to Morocco, Jordan, Syria and Iran about other barter deals.

“[Bartering] could be used for contracts with other countries that do not have the cash,” Mr Chin told the local press. “We can set the conditions for them to supply us with the raw materials that we need.”

Thailand, the world’s largest exporter of rice, is discussing barter deals with Middle Eastern countries, including Iran. The Philippines, the world’s largest importer of rice, has secured rice needs for this year through a diplomatic agreement with Hanoi.

The countries’ struggle to obtain credit to import food is boosting the price of domestic crops. Ms Sheeran said that prices of crops in some African countries were rising sharply even as international food commodities prices had fallen from last summer.

The move to barter shows the global food crisis that started last year is far from over.

[Dubai]

OMG!!! This could lead to the decimation of the broker class!!

[DrBubb]

OMG!!! This could lead to the decimation of the broker class!!

Or maybe ... a new type of broker for barter transactions

(I'd like to move GEI in that direction BTW. Or maybe the GEI-N section of this site.)

See also, GEI's BARTER thread:
http://www.greenenergyinvestors.com/index....=5461&st=20

[littledavesab]

But given the way China has been buying access to raw materials in Africa often by making infrastructure investments as part of the deal also a kind of barter

Those infra would never have seen light of day without China's involvement

[notanewmeber]

The smart countries act quickly. Life still goes on - natural instincts prevail for survival.

Now the UK better think quickly, that £ won't buy a bean soon.