Sunday, 19 June 2011

Brace yourself, high food prices are here to stay, says report

Brace yourself, high food prices are here to stay, says report

Global food prices are expected to be higher in the 2011-20 period compared with the previous decade and this could have a “devastating” impact on the poor in developing countries, an OECD-FAO report has said.
“Higher food prices and volatility in commodity markets are here to stay,” Organisation for Economic Co-operation and Development (OECD) and Food and Agriculture Organisation (FAO) said in a joint report released today.
The report ‘OECD-FAO Agriculture Outlook for 2011-2020’ noted that food prices are expected to fall from the current high level in the coming months on good harvest but the prices are expected to be higher in this decade than 2001-2010.
“A good harvest in the coming months should push commodity prices down from the extreme levels seen earlier this year. However, the outlook states that over the coming decade real prices for cereals could average as much as 20 per cent higher and those for meats as much as 30 per cent higher, compared to 2001-10,” the report said.

The projections are well below the peak price level experienced in 2007-08 and again this year, it added. “While higher prices are generally good news for farmers, the impact on the poor in developing countries which spend a high proportion of their income on food can be devastating,” said OECD Secretary General Angel Gurria in a statement.
The report pointed out that higher prices for commodities are being passed through the food chain, which leads to rising consumer price inflation in most countries.
“This raises concern for economic stability and food security in some developing countries, with poor consumers most at risk of malnutrition,” it added.
Despite increasing prices of commodities, inflation is expected to remain subdued in most parts of the world in the current decade, the report noted.
OECD-FAO report asked the governments to encourage investment in agriculture in developing countries, remove production and trade distorting policies and assist the vulnerable to better manage risk and uncertainty.
“In the current market context, price volatility could remain a feature of agriculture markets, and coherent policies are required to both reduce volatility and limit its negative impacts,” FAO Director General Jacques Diouf said.
He suggested that the key solution to the problem will be boosting investment in agriculture and reinforcing rural development in developing countries.

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