Food prices to remain high over the next decade: UN

Business Times 31 May 08;

(PARIS) Food prices will remain high over the next decade even if they fall from current records, meaning millions more risk further hardship or hunger, the Organisation for Economic Co-operation and Development (OECD) and the UN's Food and Agriculture Organisation (FAO) said in a report published on Thursday.

Beyond stating the immediate need for humanitarian aid, the international bodies suggested wider deployment of genetically modified crops and a rethink of biofuel programmes that guzzle grain which could otherwise feed people and livestock.

The report, issued ahead of a world food summit in Rome next week, said that food commodity prices were likely to recede from the peaks hit recently, but that they would remain higher in the decade ahead than the one gone by.

'It's time for action,' Jacques Diouf, head of the UN's FAO told a news conference in Paris, saying that he expected 40 leaders in Rome for a summit on what should be done immediately or in the future. 'There's an immediate need for humanitarian aid to avoid poor people going hungry,' added Angel Gurria, head of the OECD.

Beef and pork prices would probably stay around 20 per cent higher than in the last 10 years, while wheat, corn and skimmed milk powder would likely command 40-60 per cent more in the 10 years ahead, in nominal terms, the joint FAO/OECD report said.

The price of rice, an Asian staple expected to become more important also in Africa in the years ahead, would likely average 30 per cent more expensive in nominal terms in the coming decade than over the 1998-2007 period.

'In many low-income countries, food expenditures average over 50 per cent of income and the higher prices contained in this outlook (report) will push more people into undernourishment,' the report said. Millions of people's purchasing power across the globe would be hit, said the report.

The cost of many food commodities has doubled over the last couple of years, sparking widespread protests and even riots in some of the worst affected spots, such as Haiti. Many factors, including drought in big commodity-producing regions such as Australia, explained some of the acceleration in prices, as did growing demand from fast-developing countries such as China and India, the report said.

But it singled out the big drive to produce biofuels as an alternative to fossil fuels, a push the US government is sponsoring heavily, and Europe as well. The benefits at environmental and economic level as well as in terms of energy security were 'at best modest and sometimes even negative', the report said. -- Reuters