Food Prices To Stay High, "Grain Drain" Fuel Blamed
FRANCE: May 30, 2008
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 OECD and the UN's FAO food agency 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 June 3-5 world food summit in Rome, said 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 United Nations Food and
Agriculture Organisation told a news conference in Paris, saying he expected
40 leaders in Rome for a summit on what should be done immediately and for
long-term food security.
"There's an immediate need for humanitarian aid to avoid poor people going
hungry," added Angel Gurria, head of the Organisation for Economic
Co-operation and Development.
Beef and pork prices would probably stay around 20 percent higher than in
the last 10 years, while wheat, corn and skimmed milk powder would likely
command 40-60 percent 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 percent 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 percent 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, which highlighted that prices were set to remain higher not just
in nominal terms but when adjusted to take account of inflatin as well.
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.
GRAIN DRAIN
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.
"I'm saying it's time for a serious review," said Gurria.
Under US plans, about a quarter of the US corn crop will be channelled into
ethanol production by 2022 while the European Union is also aiming for as
much as 10 percent of road transport fuel to be produced using crops by
2020.
The impact of high food commodity prices on retail food prices is clearer in
developing countries than wealthy nations.
The proportion of total funds that households use to pay for food varies
hugely, from more than 60 percent in Bangladesh, to 27 percent in China and
just 10 percent in the United States or Germany, the report said.
It also highlighted the impact of financial investors in the commodities
futures markets, saying this added upwards pressure on prices in the short
term but that the jury was still out as to the long-term impact, beyond
generating greater volatility.
(Additional reporting by Sybille de la Hamaide)
(Editing by Christopher Johnson)
Story by Brian Love
REUTERS NEWS SERVICE
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