Food Prices to Rise by Up to 40% Over Next Decade, UN Report Warns

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The Guardian/UK

Food Prices to Rise by Up to 40% Over Next Decade, UN Report Warns

Growing demand from emerging markets and for biofuel production will send prices soaring, according to the OECD and the UN Food and Agriculture Organisatio

by
Katie Allen

Somalis protest over high food prices during the spike of 2008. (Photograph: Abdurashid Abikar/Getty Images)

Food
prices are set to rise as much as 40% over the coming decade amid
growing demand from emerging markets and for biofuel production,
according to a United Nations report today which warns of rising hunger and food insecurity.

Farm
commodity prices have fallen from their record peaks of two years ago
but are set to pick up again and are unlikely to drop back to their
average levels of the past decade, according to the annual joint report from Paris-based thinktank the OECD and the UN Food and Agriculture Organisation (FAO).

The
forecasts are for wheat and coarse grain prices over the next 10 years
to be between 15% and 40% higher in real terms, once adjusted for
inflation, than their average levels during the 1997-2006 period, the
decade before the price spike of 2007-08. Real prices for vegetable
oils are expected to be more than 40% higher and dairy prices are
projected to be between 16-45% higher. But rises in livestock prices
are expected to be less marked, although world demand for meat is
climbing faster than for other farm commodities on the back of rising
wealth for some sections of the population in emerging economies.

Although
the report sees production increasing to meet demand, it warns that
recent price spikes and the economic crisis have contributed to a rise
in hunger and food insecurity. About 1 billion people are now estimated
to be undernourished, it said.

Fairtrade campaigners said the predictions of sharply rising prices provided a "stark warning" to international policymakers.

"Investment
to encourage the 1 billion people whose livelihoods rely on smallholder
agriculture is vital. Not only will this increase yields but will go a
long way to increase prosperity in poverty stricken regions," said
Barbara Crowther, director of communications at the Fairtrade
Foundation.

"At the same time, the promise of increased
agriculture commodity prices could spark a new surge in land grabbing
by sovereign wealth funds and other powerful investors which risks
marginalising further rural communities who must be included in
solutions to secure and maintain food supplies."

The report says
that agricultural production and productivity must be stepped up and it
argues for a well-functioning trading system to ensure fair competition
and that surplus food is getting to where it is needed.

It also
painted a growing role for developing countries in both boosting demand
and production. Brazil is by far the fastest growing agricultural
producer, with output expected to rise by more than 40% in the next
decade and production growth is also expected to be well above 20% in
China, India, Russia and Ukraine.

"The role of developing
countries in international markets is growing quickly, and as their
impact grows, their policies also have an increasing bearing on
conditions in global markets," said FAO director-general Jacques Diouf.

"This
makes their role and contribution to global policy issues critical.
Policy discussions must be global in scope and we need to improve the
framework for such exchange of views."

Another factor driving up food prices is the controversial biofuels
industry. The report predicts that continued expansion of biofuel
output – often to meet government targets – will create additional
demand for wheat, coarse grains, vegetable oils and sugar.

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