Wednesday, June 16, 2010

Report says food prices to rise by 40 percent

A new joint report from the OECD and the United Nations says that food prices will continue to rise in the next decade. The report warns that prices will rise over 40 percent making investment into small farms even more important. The rising prices are attributed to bio-fuel production and the growing demand from developing countries.

From the Guardian, writer Katie Allen details what is in the report.

Farm commodity prices have fallen from their record peaks of two years ago but are set to pick up again and are unlikely to drop back to their average levels of the past decade, according to the annual joint report from Paris-based thinktank the OECD and the UN Food and Agriculture Organisation (FAO).

The forecasts are for wheat and coarse grain prices over the next 10 years to be between 15% and 40% higher in real terms, once adjusted for inflation, than their average levels during the 1997-2006 period, the decade before the price spike of 2007-08. Real prices for vegetable oils are expected to be more than 40% higher and dairy prices are projected to be between 16-45% higher. But rises in livestock prices are expected to be less marked, although world demand for meat is climbing faster than for other farm commodities on the back of rising wealth for some sections of the population in emerging economies.

Although the report sees production increasing to meet demand, it warns that recent price spikes and the economic crisis have contributed to a rise in hunger and food insecurity. About 1 billion people are now estimated to be undernourished, it said.

Fairtrade campaigners said the predictions of sharply rising prices provided a "stark warning" to international policymakers.

Another factor driving up food prices is the controversial biofuels industry. The report predicts that continued expansion of biofuel output – often to meet government targets – will create additional demand for wheat, coarse grains, vegetable oils and sugar.

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