Fears of new food crisis as prices soar

by
November 18, 2010

By Javier Blas, Financial Times

The bill for global food imports will top $1,000bn this year for the second time ever, putting the world “dangerously close” to a new food crisis, the United Nations said.

The warning by the UN’s Food and Agriculture Organisation adds to fears about rising inflation in emerging countries from China to India. “Prices are dangerously close to the levels of 2007-08,” said Abdolreza Abbassian, an economist at the FAO.

The FAO painted a worrying outlook in its twice-yearly Food Outlook on Wednesday, warning that the world should “be prepared” for even higher prices next year. It said it was crucial for farmers to “expand substantially” production, particularly of corn and wheat in 2011-12 to meet expected demand and rebuild world reserves.

But the FAO said the production response may be limited as rising food prices had made other crops, from sugar to soyabean and cotton, attractive to grow.

“This 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,” it said.

The agency raised its forecast for the global bill for food to $1,026bn this year, up nearly 15 per cent from 2009 and within a whisker of an all-time high of $1,031bn set in 2008 during the food crisis.

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