IRIN Reuters AlertNet 17 Nov 10;
JOHANNESBURG, 17 November 2010 (IRIN) - If wheat and maize production do not rise substantially in 2011, global food security could be uncertain for the next two years, the UN Food and Agriculture Organization (FAO) has warned.
Wheat and maize prices have shot past their 2009 highs, with FAO adding that international food import bills could surpass one trillion US dollars in 2010. Food imports last topped the trillion dollar mark during the 2007/08 food price crisis.
The organization anticipates that world cereals stocks will shrink by seven percent, with barley declining 35 percent, maize by 12 percent and wheat by 10 percent.
Cereal stocks are not as low as they were in 2007/08, "but we are being slightly alarmist in our outlook to get production figures up next year," said Abdolreza Abbassian, secretary of the Intergovernmental Group on Grains at FAO. "Stocks of yellow maize, which is used largely for animal feed, are getting to the low level they were in 2007/2008."
Six percent more maize will have to be produced in 2011 than in 2010, while wheat stocks need to rise by more 3.5 percent to ensure the world has enough reserves to tide it over 2011, said the FAO Food Outlook, released on 17 November [ http://www.fao.org/news/newsroom-journalists/embargoed-documents/en/?no_ cache=1&tx_fbfilebase_pi1%5Bfunction%5D=download&tx_fbfilebase_pi1%5Bfile%5D=NTI%253D ].
"We not only need to replenish our stocks in 2011 but we need to do better than that to ensure we have stocks to last us in 2012," said Abbassian. FAO calculations have not taken into account the possibility of unfavourable weather conditions next year.
"We are assuming we will have normal growing conditions, but if we have heavy rains or drought in some of the cereal-producing countries we could be in trouble, or if we have great growing conditions production could go up by more than expected levels," Abbassian said.
Global wheat and barley stocks declined in 2010 as severe drought and fires slashed production in Russia and Ukraine [ http://www.irinnews.org/PrintReport.aspx?ReportID=88287 ] two of the world's largest producers. The news drove up wheat prices by 45 percent and even 80 percent in the second half of 2010, with an export ban imposed by Russia adding impetus. Canada, another major wheat producer, was also hit by bad weather.
World wheat inventories are forecast to fall to 181 million tonnes, 10 percent below the 2010 level but still 25 percent above the critically low level of 2008, the Outlook said.
Maize stocks are already low as production slipped in the United States, the world's largest producer, while demand continued to grow. "With soya beans fetching good prices at the moment, many farmers in the US tended to devote more of their land to soya beans, which affected maize yields," said Abbassian.
The pressure on wheat prices affected maize, forcing prices up 50 percent from 2009 levels. [ http://www.irinnews.org/PrintReport.aspx?ReportID=90472 ]
Fortunately, stocks of rice - the staple consumed by more than half the world's population - are adequate, but prices could come under pressure if other cereals become more expensive in 2011, according to FAO's Outlook.
Global cereal prices were not going to come down at any time soon, Abbassian commented, and "It is still very early to predict how much farmers will plant in 2011 - so still a lot of unknowns."
Food prices may rise by up to 20%, warns UN
Poor harvests put global food reserves under pressure, with African and Asian countries likely to be worst hit
John Vidal, guardian.co.uk 17 Nov 10;
The UN today warned that food prices could rise by 10%-20% next year after poor harvests and an expected rundown of global reserves. More than 70 African and Asian countries will be the worst hit, said the Food and Agricultural Organisation in its monthly report.
In its gloomiest forecast since the 2007/08 food crisis, which saw food riots in more than 25 countries and 100 million extra hungry people, the report's authors urged states to prepare for hardship.
"Countries must remain vigilant against supply shocks," the report warned. "Consumers may have little choice but to pay higher prices for their food. The size of next year's harvest becomes increasingly critical. For stocks to be replenished and prices to return to more normal levels, large production expansions are needed in 2011."
Prices of wheat, maize and many other foods traded internationally have risen by up to 40% in just a few months. Sugar, butter and cassava prices are at 30-year highs, and meat and fish are both significantly more expensive than last year.
Food price inflation – fuelled by price speculation, the searing heatwave in Russia in the summer and heavy trading on futures markets – is now running at up to 15% a year in some countries. According to the UN, international food import bills could pass the $1tn mark, with prices in most commodities up sharply from 2009.
Extreme volatility in the world markets has taken the UN by surprise and forced it to reassess its forecasts for next year. "Rarely have markets exhibited this level of uncertainty and sudden turns in such a brief period of time. World cereal production this year, which is currently put at 2,216m tonnes, is 2% below 2009 levels, 63m tonnes less than the forecast reported in June," said the authors.
"Contrary to earlier predictions, world cereal production is now forecast to contract by 2% rather than to expand by 1.2%, as anticipated in June," they said.
Global food reserves, which currently stand at around 74 days, are now expected to decrease significantly in the next few months. "Cereal reserves may drop by around 7%, barley nearly 35%, maize 12% and wheat 10%. Only rice reserves are expected to increase, by 6% next year," said the report.
Much now hangs on next year's harvests, it said. "International prices could rise even more if production next year does not increase significantly – especially in maize, soybean and wheat. Even the price of rice, the supply of which is more adequate than other cereals, may be affected if prices of other major food crops continue climbing."
But food analysts said the prospects for a bumper world harvest next year were slim. "2011 will not be a good harvest. The condition of winter wheat crops is not good. Neither the US nor Russia are expecting good harvests," said Lester Brown, founder of the Washington-based Worldwatch Institute.
"The poorest will suffer the most because they feel the effect of price rises directly. In the US and Europe, wheat may only make up 10% of the price of a loaf of bread."
