Food prices are expected to remain high this year, provoking concern that the world may be approaching another crisis, but economists cautioned that many factors could prevent that.
World food prices rose sharply in late 2010, bringing them close to the crisis levels that provoked shortages and riots in poor countries two years earlier, according to U.N. data released Wednesday.
Prices are expected to remain high this year, provoking concern that the world may be approaching another crisis, although economists cautioned that many factors, like healthy supplies of key grains, could prevent that.
The food price index of the Food and Agriculture Organization, an arm of the United Nations, rose 32 percent from June to December, according to the new data. In December, the index was slightly higher than it was in June 2008, its previous peak. The index is not adjusted for inflation, however, making it difficult to make an exact comparison.
The index is a measure of commodity prices on the world export market. It was pushed up in 2010 by rising prices for cooking oils, grains, sugar and meat.
''We are at a very high level,'' said Abdolreza Abbassian, an economist with the organization, which is based in Rome. ''These levels in the previous episode led to problems and riots across the world.''
Bad weather affecting commodity crops in many exporting countries, he said, may help keep export prices high over the next several months, which could push up retail prices. ''The concern is that the long duration of the high prices for the months to come may eventually result in these high prices reaching the domestic markets of these poorer countries,'' Mr. Abbassian said. ''In the event of that, there is the chance of the repeat of the events of 2007 and 2008.''
At that time, high oil prices, growing world demand and poor harvests in some areas combined to push up food prices for poorer importing countries. That led to shortages and sometimes deadly riots in several countries, including Egypt, Haiti and Cameroon.
Mr. Abbassian said, however, that there were several key differences between then and now. Much of Africa had good harvests last year, easing reliance on imports. Overall grain prices remain significantly below the highs they hit in 2007 and 2008. Export prices for rice are 40 percent to 50 percent below those highs, he said. And global supplies of rice and wheat are much more robust than during the crisis.
But much depends on keeping those supply levels up through strong harvests in major exporting countries this year. Dry conditions in Argentina that could affect the corn and soybean crops are worrisome, he said. And heavy rains in Australia delayed the wheat harvest there, resulting in a poorer crop.
In the United States, meanwhile, the Agriculture Department has predicted that retail food prices over all will rise 2 to 3 percent in 2011. That is a higher rate than in the past two years but less than the 5.5 percent food inflation that hit U.S. consumers in 2008. Food inflation in the United States in November, the last month for which data is available, was 1.4 percent.
