Clinton says action needed to blunt food price rises

Secretary of State Hillary Clinton listens to a translation during a news conference with Italy's Foreign Minister Franco Frattini (not pictured) at the Ministry of Foreign Affairs in Rome May 5, 2011. .

ROME (Reuters) - The world has to take swift action to arrest steadily rising food prices and step up its commitment to sustainable agriculture, Secretary of State Hillary Clinton said Friday.

"We must act now, effectively and cooperatively to blunt the negative effect of rising food prices," she said in a speech to the United Nations food agency in Rome.

Rising food prices have become highly sensitive around the world after fuelling protests that toppled the rulers of Tunisia and Egypt earlier this year, with unrest spreading across North Africa and the Middle East.

The U.N.'s Food and Agriculture Organization said on Thursday that world food prices rose slightly in April, boosted by concern about the U.S. grains crop, but they were still off record highs reached in February.

FAO Director General Jacques Diouf told Reuters Insider on Tuesday a weak trend in world food prices had already begun to reverse and prices were set to rise again as concerns persist over Chinese and U.S. winter crops.

Friday agricultural commodities remained under pressure on mounting economic concerns, with U.S. corn futures down more than 2 percent to their lowest in over a month.

But traders said corn's background factors remained bullish on tight old-crop supplies and delays in spring planting.

"The fundamentals around grains and oilseeds complex haven't changed, it's very bullish for corn in the near term," said Adam Davis, senior grains trader at Merrick Capital in Melbourne which invests in agricultural commodities.

DEEPER COMMITMENT

Clinton said the world community needed to deepen its commitment to sustainable farming and food security, and said the United States was working with international food agencies to encourage more effective policies.

"That sounder approach includes improving and sharing information about food production and stocks, abstaining from export bans no matter how attractive they may appear to be, using export quotas and taxes sparingly, if at all."

Discouraging panic buying and hoarding, and providing assistance when urgently needed were also important, she said.

Clinton said she was aware that some countries -- including the United States -- may find such policies difficult to carry out given political and budgetary constraints, but she said "we need to do all we can together to find the best ways for markets to work more efficiently and deliver results."

She added food security was a foreign policy priority for Washington.

It is unclear, however, if the United States will ultimately be able to put its money where its mouth is given the huge budget deficits and the pressure to cut government spending, especially for foreign aid.

At the July 2009 G8 summit in L'Aquila, Italy, Washington pledged $3.5 billion over three years to improve food security. However, it is not certain that the Obama administration will get the money from the Congress.

A U.S. official said the government had requested $1.8 billion for its "Feed the Future" global hunger and food security initiative for the current fiscal year which ends on September 30 but did not know if it would get those funds.

(Writing by Catherine Hornby, editing by Keiron Henderson)