IMF says record food prices may persist as economic growth boosts demand
Azerbaijan, Baku, March. 4 / Trend /
Record worldwide food prices may remain high because the output response needed to ease supply concerns may take years, Bloomberg reported according to the International Monetary Fund.
Increasing incomes in developing countries have boosted demand for meat and dairy, requiring more grain for livestock feed and land for grazing animals, Thomas Helbling, an adviser for the IMF's research department, and Shaun Roache, an economist, wrote in an article. Rising demand for biofuels and adverse weather also have tightened food supplies, the IMF said.
"Over time, supply growth can be expected to respond to higher prices, as it has in previous decades, easing pressure on food markets, but this will take time counted in years, rather than months," according to the article published yesterday in the agency's Finance & Development magazine.
The global food price index, compiled by the United Nations' Food & Agriculture Organization, surged to a record in February as all food groups except sugar rose, the agency said yesterday. Rising food costs and corruption sparked political unrest across North Africa and the Middle East, ousting leaders in Tunisia and Egypt, the largest buyer of wheat.
"There's a risk that the current price spike could persist for longer than the 2007-2008 experience," Luke Mathews, a commodity strategist at Commonwealth Bank of Australia (CBA), said in a phone interview from Sydney today. "There are more commodities involved in this current spike and that means it's going to take longer to rebuild the inventories of all those back up to what we would deem safer levels."