Rising food prices are likely to present a growing political risk to companies as inflationary pressures fuel political instability in developing countries.

There have been food riots in 35 countries this year and there are concerns that governments could fall as hungry and fuel-deprived people take their anger to the streets.

In the past year, food riots have hit Egypt, Mexico, the United Arab Emirates and Yemen as prices have jumped almost 60 per cent in a year.

In Bangladesh, thousands of low-paid garment workers took to the streets in June to demand higher wages to cope with rising food prices.

Some policymakers have chosen short-term solutions such as raising salaries in Egypt, or are imposing food controls as adopted by the UAE. Haiti's prime minister was sacked this year by the national assembly following food protests

The Food and Agriculture Organisation, a United Nations body, said this month that riots and instability could again capture the headlines in the coming years.

Although the price of corn, wheat and rice has tumbled between 60 and 40 per cent from all-time highs earlier this year, in its biennial Food Outlook report the FAO warned against a "false sense of security".

In spite of the continuing fall in food prices, the world's food imports bill is set to surge above $1,000bn for the first time ever in 2008, up 23 per cent from last year and 64 per cent higher than in 2006, the FAO said.

Dr Elizabeth Stephens, head of credit and political analysis at Jardine Lloyd Thompson, a risk management specialist, says rising food prices have led to increased political risk.

"There have been food protests in 35 countries in the past year," she said. "In Indonesia the price of rice is directly correlated to the number of strikes or riots.

"A sharp increase in prices could cause production problems if there are strikes by workers and civil unrest could damage vital infrastructure like roads or telecoms or the government could impose a political crackdown.

"What companies can do is look after the social welfare of employees and secure a source of food for them such as buying wheat or rice. They also should look at increasing wages for workers if inflation is causing prices of food to rise, although this feeds into an inflationary spiral." she says.

"What global companies need to do is to avoid being seen as contributing to or being complicit with an issue. Some governments will blame rising food prices on the west, for example."

Stephen Ashwell, who heads the global response team at insurer Hiscox, agrees that a company with a good reputation locally is less likely to be targeted in times of civil unrest triggered by food shortages.

"Companies need to address their local reputation in the country and whether they are putting good back into the community, and how they treat staff," he says.

"Companies need to be aware of how they are perceived and seek to win hearts and minds.

"If you look at, for example, how the mining sector is perceived in Latin America, the relationship with the community works well and the sector is seen to be putting money back into the community.

"However, in some countries the mining sector is seen to be exploiting local resources and not putting anything back into the community."

Mr Ashwell says companies operating in emerging markets need to have plans for any potential instability caused by food riots or other political factors.

"The key is to have an evacuation plan well mapped out in advance when things begin to bubble rather than being caught out by events," he says.

"Our information suggests that there are a significant number of companies out there which have not addressed these issues as quickly as they should do.

"There is a lot companies can do. Some larger companies employ internal advisers but others can go to specialist firms for advice or insurers with experience in these fields."

Rising demand for commodities has caused growing tensions in some countries such as Zambia. China has increased its planned investment to $900m in Zambia's mineral-rich Copperbelt industrial hub over the next four years.

Dr Stephens said there have been recent protests over working practices at Chinese-owned assets in Zambia. In March, workers stormed into the Chambishi Copper Smelter in Kitwe Zambia, forcing Chinese managers to lock themselves in their offices.

Chinese mineral-extracting companies in countries such as Angola have also unwittingly stoked tension, Dr Stephens says.

"Chinese companies often ship in their own workers and import food for them as well as other supplies like clothing and tools to ensure they have a constant supply. This is good business sense - but can cause tension locally," she says.

Global companies needed to be aware of local sensitivities when opening a new mine, for example.

"If it is opened in a region between two tribes and all the workers for the operation are drawn from one of the tribes, this can cause social tension which could lead to strikes and protests," she says.