Stubbornly high food prices threaten worse hunger

ROME/PARIS (Reuters) - High food prices are here to stay for the foreseeable future, potentially forcing millions more people into hunger, two reports from the United Nations and the OECD showed on Thursday.

A surge in commodity prices in the last year was not a blip and prices will remain at or above current levels for at least the next decade as some of the main underpinning factors -- demand for a richer diet, the rise of biofuels and high oil prices -- will remain, one of the reports said.

"Food is no longer the cheap commodity that it once was," said Hafez Ghanem, assistant director-general of the U.N. Food and Agriculture Organization (FAO).

"Rising food prices are bound to worsen the already unacceptable level of food deprivation suffered by 854 million people. We are facing the risk that the number of hungry will increase by many more millions of people," he said.

In a 10-year look-ahead at likely food price scenarios, to be published next week, the FAO and the Organization for Economic Co-operation and Development saw no return to pre-crisis levels.

"On average over the coming 10-year period, nominal prices for cereals, rice and oilseeds are expected to be 35 percent to 65 percent higher than on average in the past 10 years," said a summary of the Agricultural Outlook report seen by Reuters.

"Prices in real terms are projected to be 10 percent to 35 percent higher than in the past decade."

Even a bumper harvest expected this year will do little to ease the plight of the world's poor, FAO said in its twice-yearly Food Outlook which gives short-term estimates.

Good weather and increased plantings will provide a 3.8 percent rise in world cereal output, with wheat up 8.7 percent. That has meant the price surge has started to level off, but prices will not plummet back to pre-crisis levels, FAO said.

Rice, a staple for more than half the earth's population, will remain in short supply on global markets, and poor countries that rely on food imports could see food bills up 40 percent this year after a similar price hike in 2007, its report said.

"The sustained rise in imported food expenditures (for poor countries) ... constitutes a very worrying development," it said. "Their annual food import basket could cost four times as much as it did in 2000."

Even if harvests continue to be good, record low stocks need to be replenished and many of the factors that came together to create the "perfect storm" for the global food price surge remain.

"The elements are going to be there," said Ali Gurkan, FAO's head of commodity markets.

As well as increased demand for a richer diet from rapidly developing India and China, the relatively new practice of turning food into fuel will remain strong, as will crude oil prices which boost demand for biofuel and increase farming and freight costs, he said.

Biofuels will be one of the more controversial topics to be discussed at a food crisis summit at FAO's Rome headquarters on June 3-5, along with aid, trade and biotechnology.

Ghanem said the priority should be helping poor farmers get hold of seeds and fertilizers to improve farm productivity which in Africa is one-third that of Asia and can be as little as one-tenth that of Europe and North America.

"Helping them enhance productivity is the most 'pro-poor' investment we can make," he said.

(Writing by Robin Pomeroy; Editing by Ben Tan)