Global food prices to rise this decade

Posted by Nicole Eckersley on 20th June 2011

A major international report has predicted that average food commodity prices will be much higher this decade than the last.

The Organisation for Economic Cooperation & Development (OECD) and the Food & Agriculture Organisation (FAO) have projected maize costs will be almost 20% higher this decade on average, and rice more than 15% higher.

It also predicts that butter prices will soar worldwide and stay high, rising more than 45%, with poultry prices increasing 30% to 35%.

Wheat prices are projected to remain stable, but generally, cereal prices could be 20% higher and meat 30% higher, the OECD-FAO Agricultural Outlook released today (17 June) said.

However, these projections, the organisations noted, “are well below the peak price levels in 2007-08 and… this year”.

Food consumption will expand “most rapidly” in eastern Europe, Asia and Latin America, especially the consumption of meat, dairy, vegetable oils and sugar.

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. 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.”

OECD secretary-general Angel Gurría said high prices are “generally good news” for farmers but warned of the possible “devastating” impact on the world’s poor.

“That is why we are calling on governments to improve information and transparency of both physical and financial markets, encourage investments that increase productivity in developing countries, remove production and trade distorting policies and assist the vulnerable to better manage risk and uncertainty,” Gurría said.