UN food agency warns on rising food costs

November 17, 2010 | 23:24
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The global cost of food imports is rising sharply this year because of price increases caused by unexpected shortfalls in major cereals due to bad weather, the UN food agency FAO said Wednesday.

"Total cereal production will drop by two per cent.... Declining production has had an impact on

prices," Hafez Ghanem, deputy head of the Rome-based Food and Agriculture Organisation (FAO), said at a press conference.

The forecast contained in the agency's latest Food Outlook report dramatically revises its earlier predictions in June that world cereal production would expand by 1.2 per cent.

According to FAO expert Adam Prakash: "The global import food bill was $893 billion (662 billion euros) in 2009. This year we're approaching the one trillion dollars mark."

If the figure passes the trillion-dollar mark, it would be at a level not seen since food prices peaked at record levels in 2008, he said.

Food import bills "are expected to rise by 11 per cent in 2010 and by 20 per cent for low-income food-deficit countries," the FAO said.

"There is a high degree of uncertainty on the market," said FAO senior economist Abdolreza Abbassian.

"There is no crisis at this stage," he said, but added: "There is no doubt that speculative activities have brought the market great instability and volatility."

In 2008, the price of cereals reached historic levels, provoking a food crisis and riots in a number of African countries, as well as in Haiti and the Philippines.

Ghanem said the current stocks shortage was caused by "bad weather conditions," and the situation had been aggravated by policy responses from some exporting countries, which had seen a knock-on effect on the market.

"With the pressure on world prices of most commodities not abating, the international community must remain vigilant against further supply shocks in 2011 and be prepared," FAO said in a statement.

AFP

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