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UN Warns of Surging Food Prices, 'Harder Times Ahead'

Wednesday, 17 Nov 2010 07:00 AM

World food imports will exceed $1 trillion this year, close to the record reached in the food-crisis year of 2008, on surging commodity prices, the United Nations’ Food and Agricultural Organization said.

The global cost of importing foodstuffs will jump 15 percent to $1.026 trillion in 2010, from $893 billion last year and compared with $1.031 trillion in 2008, the Rome-based FAO said in a report today. The world faces “harder times ahead” unless production of major food crops rises next year, it said.

Rising global demand for non-staple foodstuffs including dairy and meat is inflating the international food bill, according to the report. The “sharp” rise in grain, sugar and oilseed prices in recent months is a cause of concern for prices next year, the agency said.

“It is unlikely that the effects of higher prices will be contained in their respective sectors, as many of these commodities constitute major feedstock ingredients for the livestock or biofuels sector,” the FAO said. “With price increases largely reflecting scarcity in export supply, global competition for securing foodstuffs is set to intensify.’”

Food prices rose to a record in June 2008, prompting deadly riots in countries from Haiti to Egypt, before falling in the second half of that year. The FAO’s world food price index in October climbed to the highest level since July 2008.

‘Harder Times’

The world should “prepare for harder times ahead unless production of major food crops increases significantly in 2011,” the FAO said in a statement. “For major cereals, production must expand substantially to meet utilization and to reconstitute world reserves.”

The outlook for the global food-import bill this year was raised from $921 billion in June.

World cereal production is forecast to decline 2.1 percent to 2.22 billion metric tons in the 2010-2011 season, a reversal of a June outlook for a 1.2 percent rise, the FAO said. The decline is mainly due to a smaller crop in the former Soviet Union and “disappointing” yields in the European Union, the U.S. and Canada, it said.

Global grain stocks are expected to slump 7.2 percent to 512.5 million tons at the end of the 2010-2011 season, instead of rise 0.9 percent as previously forecast.

Farmers are likely to respond to current grain prices by increasing planting, the UN agency said. Rising prices have also made commodities including soybeans, sugar and cotton more attractive to grow, which may limit the production response of some products to a level “insufficient to alleviate market tightness,” the FAO said.

Higher Prices

“Against this backdrop, consumers may have little choice but to pay higher prices for their food,” the FAO said. “International prices could rise even more if production next year does not increase significantly,” especially in corn, soybeans and wheat, it said.

World wheat production is forecast to slump 5.1 percent to 647.7 million tons in 2010-2011, the lowest level in three years, even as usage climbs 1.2 percent to a record 668 million tons, the FAO said. The harvest outlook was cut from 676.5 million tons in June.

“The bulk of this downward revision reflects a sharp fall in production in the Russian Federation and smaller-than- expected harvests in many other countries,” the FAO said.

The agency forecast stocks of wheat will slide 9.9 percent to 180.9 million tons at the end of this season.

Wheat Prospects

“Attention is now increasingly on production prospects for 2011,” the FAO said. With winter plantings in major producing countries of the former Soviet Union “lagging behind last year and unfavorable weather hampering early crop development in the U.S., prices are expected to remain high and volatile for the remainder of the season,” the FAO said.

Output of coarse grains, which includes corn and barley, is forecast to slide 2.1 percent to 1.102 billion tons from 1.125 billion tons in 2009-2010. Ending stocks are expected to plunge 12 percent to 198.4 million tons, the FAO said.

“Considering that prices of coarse grains at this time of the year, corresponding with the main harvest period in Northern Hemisphere, should normally be at their seasonal lows, there is a strong likelihood that prices may rise even further from these already high levels,” the FAO said.

World rice production is forecast to rise 2.4 percent to a record 466.7 million tons of milled rice on “relatively good crops” in major import countries, according to the FAO. That will help lift reserves of the grain by 5.6 percent to 133.2 million tons, it said.

The FAO forecasts a decline of 0.3 percent to 453.7 million tons for total oilseed production in 2010-2011, down from a record 454.8 million tons in the previous season.

Sugar production is expected to climb 7.7 percent to 168.8 million tons in the 2010-2011 season, as “strong” international sugar prices in the past 12 months prompted an increase in the growing area, the FAO said. Output is expected to exceed consumption for the first time since 2007-2008, the agency said.

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World food imports will exceed $1 trillion this year, close to the record reached in the food-crisis year of 2008, on surging commodity prices, the United Nations Food and Agricultural Organization said.The global cost of importing foodstuffs will jump 15 percent to $1.026...
UN,Warns,Surging,Food,Prices,Harder,Times,Ahead
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2010-00-17
Wednesday, 17 Nov 2010 07:00 AM
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