ROME, July 11 The outlook for world food
inflation looks lower and more stable as agricultural commodity
prices settle over the next decade following years of
volatility, the U.N.'s Food and Agriculture Organisation (FAO)
and the OECD said on Friday.
Primary agricultural markets have experienced a "roller
coaster" over the last decade, marked by a record high in 2008
and global recession in 2009, the agencies said.
"At the start of the (2014-2023) outlook period, food price
inflation at the consumer level appears lower and more stable
for all regions than it has been in the turbulent years
following the price crisis," the OECD and FAO said.
Agricultural markets remained turbulent, after near-record
prices in 2012 prompted increased production which led to
surpluses for wheat, rice, sugar and vegetable meal.
The outlook is therefore starting from a "correction period"
which is expected to persist for one or two more years.
The agencies said the projections were based on assumptions
about government policies, markets, weather and macroeconomics,
but some areas of uncertainty which were particularly difficult
to predict, such as animal diseases, were not included.
Bad weather and concerns over export restrictions were
blamed for the 2012 price surge, which raised concerns of a
return to conditions that sparked violent protests in countries
including Egypt, Cameroon and Haiti in 2007/8.
The OECD and FAO said crop prices would drop for one or two
more years before stabilising at levels above those seen before
2008, but below recent peaks.
Wheat prices are projected to slide about 1 percent a year
in real terms for the next 10 years, staying around 13 percent
below the previous decade's average.
Global agricultural production and consumption will rise in
the next decade, as wealthier people in emerging countries eat
more protein, but the growth rate will be slower than in the
previous 10 years, the agencies said.
Strong demand for meat from an expanding middle class in the
Middle East and Asia will keep meat prices from falling as much
as feed grain prices, and meat prices in real terms will average
higher than the previous decade after general price inflation.
In line with lower growth in production and consumption,
trade will rise more slowly in the next decade. Grains and meat
trade are set to advance 1.5 percent and 2.5 percent in volume
terms each year, half the rates of the previous decade.
While the Americas will remain the dominant export region
globally, Ukraine will become Europe's biggest exporter of
grains and oilseeds.
Worries about conflict in Ukraine disrupting shipments
helped force prices higher earlier this year, but the FAO said
in June these concerns had receded as shipping patterns from the
country remained regular and weather conditions improved.
(Reporting by Isla Binnie, editing by David Evans)