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High world food prices here to stay - U.N. expert

NEW DELHI (Reuters) - Nations will move to raise food supplies but the world is living through a structural shift towards higher food prices that will be hard to reverse, the chief of a United Nations agency fighting rural poverty said.

A vendor arranges oranges at a fruit wholesale market in Kolkata in this April 9, 2008 file photo. Nations will move to raise food supplies but the world is living through a structural shift towards higher food prices that will be hard to reverse, the chief of a United Nations agency fighting rural poverty said. REUTERS/Parth Sanyal/Files

A combination of high oil prices, rising demand for food in a wealthier Asia, the use of farmland and crops for biofuels, bad weather and speculation have pushed up food prices, prompting violent protests in a handful of poor states.

“Most experts do think higher prices are here for a longer term,” Lennart Bage, president of the UN’s International Fund for Agricultural Development, told Reuters in an interview on Thursday.

“We will see a supply response, so hopefully the prices will come down somewhat,” he said before adding a word of caution.

“According to experts in the field, prices will remain higher than in the past and what we see is most likely a structural shift to higher prices.”

Global food prices, based on United Nations records, rose 35 percent in the year to the end of January, accelerating an upturn that began, slowly at first, in 2002.

Since then, prices have risen 65 percent. In 2007 alone, according to the FAO’s world food index, dairy prices rose nearly 80 percent and grain 42 percent.

Bage said the rapid increases had provided a strong signal that production must rise, and already there were signs of more planting taking place around the globe.

“There will be a supply response. On that there is no doubt. How far the supply response will go in pushing prices down, that is the question that we don’t have an answer to right now,” Bage said.

He said the international community must come together and take immediate measures to feed people facing hunger and focus on a long term solution by investing much more in agriculture.

“We have seen government interest in funding agriculture wane over the last 10-15 years in many countries. We have seen international development assistance aid to agriculture go down from 20 percent in the early 1980s to less than 3 percent now,” Bage said.

He said global institutions were staring to craft a response to deal with high food prices and expected a meeting of finances ministers in Washington next week to address the issue.

India and Africa vowed on Wednesday to strive together for food security and called on the West to rethink some policies, such as diverting huge food stocks for biofuels, which has created shortages and driven up prices in poorer countries.

The Food and Agriculture Organisation (FAO) warned that high food prices and shortages would continue in the short term, making some poorer countries vulnerable to food riots.

Bage said if developed differently biofuels could bring benefits to producers through the use of marginal land and residues from cereal produce, and by investing in second generation biofuels based on cellulose.

“It is very important to see where biofuels add value and where it is problematic. There is scope for bio-energy where it is not competing with food.”

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