//24 Jun 2011
Higher food prices and volatility in commodity markets are here to stay, according to a new report by the OECD and FAO.
The OECD-FAO Agricultural Outlook 2011-2020 says that 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% higher and those for meats as much as 30% higher, compared to 2001-10. These projections are well below the peak price levels experienced in 2007-08 and again this year.
Higher prices for commodities are being passed through the food chain, leading to rising consumer price inflation in most countries. This raises concerns for economic stability and food security in some developing countries, with poor consumers most at risk of malnutrition, the report says.
FAO Director-General Jacques Diouf said: "In the current market context, price volatility could remain a feature of agricultural markets, and coherent policies are required to both reduce volatility and limit its negative impacts", noting that "the key solution to the problem will be boosting investment in agriculture and reinforcing rural development in developing countries, where 98% of the hungry people live today and where population is expected to increase by 47% over the next decades."
The report suggests, among other things, that G20 countries take steps to boost agricultural producitivity in developing countries, reduce or eliminate trade-disorting policies and establish a new mechanism to improve information and transparency on agricultural production, consumption, stocks and trade.
Per-capita food consumption will expand most rapidly in Eastern Europe, Asia and Latin America, where incomes are rising and populations growth is slowing. Meat, dairy products, vegetable oils and sugar should experience the highest demand increases, according to the report.
Related websites:
FAO
OECD
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