Food may be cheaper by one-third if crude price halves: FAO

Global food commodity prices could come down by up to 32 per cent if crude oil falls to 65 dollars a barrel in 2010 -- half the average of 130 dollars a barrel this year, a United Nations body has said.     

"A halving of oil prices would lead to a significant decline in agricultural commodity prices, ranging from 21 to 32 per cent in 2010, depending on the commodity," the Food and Agriculture Organisation (FAO) said in the report 'The State of Food and Agriculture 2008'.     

Rice prices would come down by 32 per cent, maize by 26 per cent, vegetable oil by 24 per cent, wheat by 23 per cent and sugar by 21 per cent, the report said.     

An estimated rise or fall in petroleum prices is done considering the average baseline price at 130 dollar a barrel for 2008, it added.     

The report also analysed the impact on farm commodity prices if petroleum rates rise to 195 dollar a barrel in 2010.     

FAO said, "A doubling of petroleum prices would lead to higher commodity prices in the range of 16-30 per cent."     

Rice prices would go up by 30 per cent, maize by 27 per cent, vegetable oil by 26 per cent, wheat by 23 per cent and sugar by 16 per cent, it said.     

Noting on the recent spike in commodity prices, the report said "among the factors responsible for the recent surge in commodity prices are higher costs of production driven by rising petroleum prices, weather-related production shortfalls in key exporting countries and strong demand growth - including for biofuel feedstocks".