World food prices may gain further: UN

World food prices rose to a record in February and grain costs may continue to rise in the next several months, with only rice keeping the world from a repeat of the crisis three years ago, the United Nations said.

An index of 55 food commodities rose 2.2 per cent to 236 points from 230.7 in January, the eighth consecutive gain, the UN’s Food and Agriculture Organization said on Thursday. Wheat rose as much as 58 per cent on the Chicago Board of Trade in the past 12 months, corn gained 87 per cent and rice added 6.5 per cent.

 

“I’ve never loved rice more than now,” said Abdolreza Abbassian, a senior economist at the FAO in Rome. “Probably rice is the commodity which is separating us from a food crisis.”

Rising food costs contributed to riots across North Africa and the Middle East in the last several months that toppled leaders in Egypt and Tunisia. Prices surged as bad weather ruined crops from Canada to Australia and Russia banned grain exports after its worst drought in a half century.

Global food prices probably will rise in the first half of this century because of an expanding population and higher incomes, slower crop-yield growth and the effect of climate change, Ross Garnaut, the Australian government’s climate-change adviser, said yesterday.

More people
Food production will have to climb by 70 per cent between 2010 and 2050 as the world population expands to 9 billion and rising incomes boost meat and dairy consumption, the FAO forecasts. Producing 1 kilogram (2.2 pounds) of pig meat can take 3.5 kilograms of feed, US Department of Agriculture data shows.

The UN’s food-price index rose from 176 points from a year earlier, with all five food groups advancing. The dairy index climbed to 230 points in February from 221.3 in January.

Milk futures traded in Chicago jumped 15 per cent last month following a 26 per cent surge in January, the biggest monthly gain since March 2004. Whole-milk powder prices rose to a record in its biweekly auction, Fonterra Cooperative Group Ltd, the world’s biggest dairy exporter, said March 1.

The FAO’s sugar-price index slipped to 418 points from a record 420.2 points in the previous month. The UN agency’s index is trade-weighted, with the sweetener accounting for 7 per cent. Raw-sugar prices climbed 37 per cent in New York in the past year.

Meat prices
The gauge for meat, which makes up 35 per cent of the overall index, rose to 169 points from 165.9 points. Meat is a “significant” part of the diet in developed countries, which may see more inflation from food than in 2007-08, according to Ken Ash, trade and agriculture director at the OECD.

A gauge of cooking oils and fats gained to 279 points from 277.7, the FAO said. Its cereal-price index climbed to 254 points from 244.8 in January, below the peak level of 274.3 in April 2008, the report showed.

Countries probably spent at least $1 trillion on food imports in 2010, with the poorest paying as much as 20 per cent more than in 2009, the UN has said. Surging food and energy costs are stoking emerging-market inflation and have the power to topple governments, Nouriel Roubini, the New York University economist who predicted the financial crisis, said January 26.

Food prices’ effect on poor consumers is less severe than three years ago, when costs also surged, because rice rose less than other grains, according to the Organization for Economic Cooperation and Development. Rice is the staple food of more than half of the world population, according to the International Rice Research Institute.