UN warns food prices destined to remain high
Friday, 9 November 2007
Rome, Nov 8 (Internet): Global cereal prices, which continued to rise this year, are expected to remain high in 2008, pushing up retail prices for basic foods such as bread, pasta, meat and milk, a United Nations Food and Agriculture Organisation (FAO) report said Wednesday. "The world has rarely felt such a widespread and commonly shared concern about food price inflation," the FAO said in its latest Food Outlook.
High prices were mainly the result of production problems in several major exporting countries and very low world stocks, the Rome-based UN agency said in its report.
Many countries would pay more for importing cereals from world markets than they did in previous years, even though they were expected to import less, FAO said.
"Record freight rates and high export prices are the main reason for the increase in their (countries') import bills," it said.
Soaring petroleum prices and environmental concerns were driving demand for biofuel alternatives made from agricultural products normally used to feed animals and humans, FAO also warned.
In particular the demand for sugar, maize, rapeseed, soybean and palm oil - all used to produce biofuels - was destined to increase in the years to come, FAO said.
Increased fuel costs as well as traffic and storing congestion at seaports had pushed up shipping costs for food, further contributing to the rise in retail prices, the report added.
But prices for an important cereal such as wheat could decrease, FAO said.
According to the report, more wheat was being planted around the world for harvesting in 2008 with a strong expansion in production bound - assuming normal growth in consumption - to bring down wheat prices.
Maize prices hit a 10-year high in February 2007, but have fallen considerably since.
Supply constraints in the face of brisk demand for biofuels triggered the initial price hike in maize prices, the report said.
However, reacting to a massive expansion in maize plantings and expectations of a record crop this year, prices have started to come down, although by September they had still remained 30 per cent above last year, it added.
Prices of barley, another important cereal, soared also due to supply problems in Australia and Ukraine, tighter availability of maize and other feed grains, compounded with strong import demand, the report said.
High prices were mainly the result of production problems in several major exporting countries and very low world stocks, the Rome-based UN agency said in its report.
Many countries would pay more for importing cereals from world markets than they did in previous years, even though they were expected to import less, FAO said.
"Record freight rates and high export prices are the main reason for the increase in their (countries') import bills," it said.
Soaring petroleum prices and environmental concerns were driving demand for biofuel alternatives made from agricultural products normally used to feed animals and humans, FAO also warned.
In particular the demand for sugar, maize, rapeseed, soybean and palm oil - all used to produce biofuels - was destined to increase in the years to come, FAO said.
Increased fuel costs as well as traffic and storing congestion at seaports had pushed up shipping costs for food, further contributing to the rise in retail prices, the report added.
But prices for an important cereal such as wheat could decrease, FAO said.
According to the report, more wheat was being planted around the world for harvesting in 2008 with a strong expansion in production bound - assuming normal growth in consumption - to bring down wheat prices.
Maize prices hit a 10-year high in February 2007, but have fallen considerably since.
Supply constraints in the face of brisk demand for biofuels triggered the initial price hike in maize prices, the report said.
However, reacting to a massive expansion in maize plantings and expectations of a record crop this year, prices have started to come down, although by September they had still remained 30 per cent above last year, it added.
Prices of barley, another important cereal, soared also due to supply problems in Australia and Ukraine, tighter availability of maize and other feed grains, compounded with strong import demand, the report said.