Gary Duncan, Economics Editor
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The era of cheap and plentiful food was declared at an end yesterday as a key international report issued a warning that high world food prices will continue for at least a decade.
Much bigger family food bills will remain an everyday fact of life for consumers across the West, while for poor nations permanently dearer food will spell widespread hunger, famine and civil conflict, the study from the Organisation for Economic Cooperation and Development and the UN Food and Agriculture Organisation said.
The report said that after soaring in the past year to record levels, food prices should fall back. But it added that the cost of everything from grain to meat and dairy products will remain stuck “substantially above” the average levels of the past ten years.
As ministers and officials from around the globe prepare for a world food summit in Rome next week, Angel Gurria, the OECD’s Secretary-General, said that prices should ease gradually, but “most agricultural commodity prices over the next ten years will still exceed the average of the previous decade by 10 to 50 per cent”.
The UN and OECD report predicted that average prices between now and 2017 for beef and pork will be 20 per cent higher than the average in the past ten years; those for sugar will be 30 per cent higher; for wheat, maize and skimmed milk powder between 40 and 60 per cent higher; for butter and oilseed produce more than 60 per cent higher; and for vegetable oils 80 per cent higher.
The increases in the cost of food were blamed by the report on a range of factors, including surging demand in emerging markets such as China and India as their populations grow richer and rising living standards lead to bigger appetites and changing diets.
Other critical driving forces in the long term included high oil prices, urbanisation as the poor flock to developing world cities, extreme weather blamed on global warming, exploding production of biofuels from crops and fast-growing populations. The World Bank estimates that these factors have combined to send overall world food prices up by 83 per cent in just three years.
Some of the forces driving prices higher are now set to fade, yesterday’s analysis concluded, with the huge scale of recent increases judged to be exceptional. The report cited “adverse weather in major grain-producing regions, with spillover effects on crops and livestock that compete for the same food”.
It said that these conditions were not new, and should pass. However, the UN and the OECD united to warn world leaders that the expected persistence of high food prices in the longer term meant a global humanitarian emergency. “Current high prices will hit the poor and hungry people hardest,” the report said.
Mr Gurria emphasised that “the end of cheap food in a world where half the population lives with less than $2 a day is a source of grave concern”.
With food shortages and starvation rations in even some relatively rich developing countries sparking riots and unrest, Jacques Diouf, the director-general of the Food and Agriculture Organisation, said: “Rising prices translate, unfortunately, as an increase in hunger and civil strife. Uncertainty rules and our people are worried. Coherent action is urgently needed by the international community to deal with the impact of higher prices on the hungry and poor.”
In urging action to try to rein-in food prices, the report called for increased investment in agriculture and related research and measures to help poorer countries to diversify their economies and to improve governance and infrastructure.
Helping hand
— The World Bank announced $1.2 billion (£607 million) in loans and grants for poor countries facing soaring food and fuel prices and called for a global action plan. Robert Zoellick, the bank’s president, said that Haiti, Djibouti and Liberia would be the first to benefit from grant funding of between $5 million and $10 million each under the new rapid-response facility
— Angel Gurria, the OECD Secretary-General, has urged governments to review the scale of subsidies for grains that are used to produce ethanol. Global biofuel production will more than double over the next decade, yesterday’s report from the OECD and United Nations predicted, as it sounded a warning that this would lead to a flare-up of pressure on agriculture. Mr Gurria said that more genetically modified crops should be planted to try to curb food price rises
— Worldwide ethanol production is forecast to reach 125 billion litres by 2017, twice last year’s output, with production of biodiesel set to rise even faster
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