FAO’s 2011 biannual Food Outlook was published yesterday (7th June), providing grim reading for poor nations struggling to meet the food demands of their populations. In spite of record harvests for many food commodities, the FAO prediction is that prices will remain high for the foreseeable future.
The report cites a sharp rundown on food inventories and only modest overall production increases for the majority of crops as reasons for continuing strong prices.
“The general situation for agricultural crops and food commodities is tight with world prices at stubbornly high levels, posing a threat to many low-income food deficit countries,” according to David Hallam, director of FAO’s Markets and Trade Division.
While international food prices fell by 1% in May after high inflation at the start of the year, they remained 37% higher than they were for May 2010. Cereal and sugar prices fell at the news of good growing conditions across Europe, and the announcement that Russia would re-enter international grain markets this year. However record dairy and meat prices kept overall commodity prices high.
With demand for cereals continuing to increase steadily, an improved 2011 crop, which is predicted to deliver more rice, maize and wheat than in 2010, is unlikely to ease prices over the next two years. Production is likely to be a match for demand this year, according to FAO, making depleted reserves a key factor in driving higher prices.
The report says that in international food trade, the global food import bill is expected to reach a new record of US$1.29 trillion in 2011 – 21% more than in 2010. Low-Income Food Deficit Countries (LIFDCs) and Least Developed Countries (LDCs) would be hardest hit since they would likely have to spend respectively 27% and 30% more on food imports than last year.
Expenditures on imported foodstuffs for vulnerable countries could account for roughly 18% of their total import bills compared to a world average of around 7%.
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