* Economic crisis could lead to a food crisis - Diab
* Starvation could spark migration to Europe, says PM
* 'Many people have stopped buying meat, fruit, veg'
* Diab calls for U.S. and EU to set up emergency fund (Adds trader comments, parallel market price, context)
By Eric Knecht and Tom Perry
BEIRUT, May 21 (Reuters) - Lebanon's financial meltdown could tip the country into a full-blown food crisis, as people hit by soaring prices and the fallout of COVID-19 become unable to afford even basics like bread, the prime minister warned.
Lebanon has been paralysed by an economic crisis that has seen dollars dry up, banks impose tight capital controls, unemployment surge, and a sovereign debt default in March - all before the compounding blow of the coronavirus outbreak.
Prime Minister Hassan Diab said the pandemic could trigger a global food security emergency that would put vulnerable countries like Lebanon at particular risk.
"Once the breadbasket of the Eastern Mediterranean, Lebanon is facing a dramatic challenge that seemed unimaginable a decade ago: the risk of a major food crisis," he wrote in the Washington Post.
He said attempts by some countries to restrict food exports must be resisted and called on the United States and European Union to set up an emergency fund to help the Middle East avoid a humanitarian disaster.
"Starvation may spark a new migration flow to Europe and further destabilize the (Middle Eastern) region," he added.
Lebanon entered talks with the International Monetary Fund this month, hoping to secure $10 billion in aid that would partially fund an economic reform programme to cut state waste and overhaul a banking sector steeped in losses.
Meanwhile, the situation has grown dire.
Lebanon's currency, the pound, has collapsed on a parallel market outside commercial banks, doubling the price of food in the import-dependent country since January and sparking unrest that has led to banks across the country being burned and a protester killed.
"A few weeks ago, Lebanon witnessed its first 'hunger protests'. Many Lebanese have already stopped buying meat, fruits and vegetables, and may soon find it difficult to afford even bread," wrote Diab.
FOOD IMPORTS AT RISK
Food importers worry that dwindling dollars are on the verge of running out, and that the dollars available could reach a price level that would put food out of reach for a growing class of impoverished Lebanese.
"Within two months, if the trend stays like this, we will not be able to find enough dollars to make transfers abroad to buy basic things," said Hani Bohsali, a major food importer.
Bohsali said food imports required financing of about $5 million per day and importers were increasingly unable to find enough banknotes to complete new orders.
"If you can't finance 50% of your shipment, the whole shipment is gone," said Bohsali.
Fearing shortages, some supermarkets have begun to ration items for customers, placing limits on how many can be purchased at a time.
In a televised address on Thursday, Diab said the central bank would begin providing dollars for food imports, part of steps to curb the currency's slide on the parallel market where it has lost about 65% of its value since October.
Importers said the pound was trading at around 4250 to the dollar on Thursday versus the official peg of 1507.5, which has remained available only for buyers of fuel, medicine, and wheat.
But even dollars at the parallel market rate have become elusive amid a crackdown on exchange houses for not complying with a 3200 price level that has seen money changers arrested, prompting them to strike. (Reporting by Eric Knecht and Tom Perry; Editing by Toby Chopra and Pravin Char)
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