UN: Global food bill set to top 1-trillion dollars in 2010

Photo: UN: Global food bill set to top 1-trillion dollars in 2010 / Other News

Global food import bills could top 1-trillion dollars in 2010 with prices in most commodities up sharply from 2009, due to bad weather, some countries' export restrictions and fluctuations in currency markets, the United Nations said Wednesday, DPA reported.

In the latest edition of its Food Outlook Report, the Rome-based UN Food and Agricultural Organization (FAO) also warned the international community to prepare for harder times ahead unless production of major food crops increases significantly in 2011.

Food import bills for the world's poorest countries are predicted to rise 11 per cent in 2010 and by 20 per cent for low-income food-deficit countries, according to the report.

This means, by passing a trillion dollars, the global import food bill will likely rise to a level not seen since food prices peaked at record levels in 2008, the FAO said.

"With the pressure on world prices of most commodities not abating, the international community must remain vigilant against further supply shocks in 2011 and be prepared."

Contrary to earlier predictions, world cereal production is now forecast to contract by 2 per cent rather than to expand by 1.2 per cent as anticipated in June.

Unexpected supply shortfalls due to unfavorable weather events were responsible for this change in direction, according to the report.

Global cereal stocks are forecast to decline sharply and the Food Outlook report urges for production to be stepped up to replenish inventories.

World cereals stocks are anticipated to shrink by 7 per cent, with barley plunging 35 per cent, maize 12 percent and wheat 10 per cent, according to the FAO.

Only rice reserves are foreseen to increase, by 6 per cent according to the report.

"Given the expectation of falling global inventories, the size of next year's crops will be critical in setting the tone for stability in international markets," the FAO said.

"For major cereals, production must expand substantially to meet utilization and to reconstitute world reserves, and farmers are likely to respond to the prevailing prices by expanding plantings.

"Cereals however may not be the only crops farmers will be trying to produce more of, as rising prices have also made other commodities attractive to grow, from soybeans to sugar and cotton," the report said.

The organisation warned that such practices could limit individual crop production responses to levels that would be insufficient to alleviate market tightness.

"Against this backdrop, consumers may have little choice but to pay higher prices for their food."

International prices could rise even more if production next year does not increase significantly - especially in maize, soybean, and wheat, according to the report..

Even the price of rice, the supply of which according to FAO is more adequate than other cereals, may be affected, if prices of other major food crops continue climbing.

Sugar prices, which recently surpassed 30-year highs, remain elevated and extremely volatile.

In the oilseeds sector, firm prices reflect relatively slow growth in world production failing to keep pace with fast expanding demand.

Meat prices have also risen but the increase has been far more contained so far.

In the dairy sector, prices for butter have already hit "an all time high," the FAO said.

Prices of internationally traded cassava have also soared to a record level this year with production in 2010 now forecast to decline for the first time in 15 years.

Fish also registered large price gains, showing a strong recovery after sharp falls since the end of 2008.

That is mostly because aquaculture producers responded to low prices by cutting stocks, which affected production. Strong demand in both developing and developed countries continues to underpin fish prices, according to the FAO.

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