Higher food prices and volatility in commodity markets will stay over the coming decade, according to a joint report released Friday by the Organization for Economic Cooperation and Development (OECD) and the UN Food and Agriculture Organisation (FAO).
Both organizations called for better coordinated agricultural policies and strengthened investment.
"In the current market context, price volatility could remain a feature of agricultural markets, and coherent policies are required to both reduce volatility and limit its negative impacts," FAO Director General Jacques Diouf said when presenting the 2011-2020 version of OECD-FAO Agricultural Outlook with OECD Secretary-General Angel Gurria.
In the next decade, "real prices for cereals could average as much as 20 percent higher and those for meats as much as 30 percent higher, compared to 2001-10," though well below the peak price levels in 2007-08 and in this year, the newly-released report predicted.
World food prices hiked dramatically in 2007 and the first half of 2008 before fell down during the global recession, sparking a wave of worldwide food crisis, which was mostly interpreted as a result of droughts in grain-producing nations and rising oil prices. Since mid-2010, wheat prices has surged remarkably with double-digit percentage per month at most, arousing new concerns of food crisis.
Cautious optimism that prices can return to normal from a shocking level earlier this year is reasonable in the coming months, as higher prices is spurring food production in the short-term, the report noted, but for the long-term, concerns for economic stability and food security in some developing countries need to be addressed.
"While higher prices are generally good news for farmers, the impact on the poor in developing countries who spend a high proportion of their income on food can be devastating," Gurria said.
To Diouf, the key solution to the problem will be boosting investment in agriculture and reinforcing rural development in developing countries, where home most of the hungry people in the world and is the most vulnerable region to food shortage impact.
Besides, the two heads of international organizations jointly called governments to improve information and transparency of both physical and financial markets, and remove production and trade distorting policies.
Russia, the world biggest exporter of wheat, imposed a ban last August on grain exports after being hit by the most severe drought in decades and a spate of wildfire, which added up market pressure on food prices. Russian government recently announced to lift the ban on 1 July this year.
The 2011-2020 Outlook sees global agricultural production growing more slowly over the next decade than in the past 10 years, as farm output is expected to rise by 1.7 percent annually, compared to the 2.6 percent growth rate of the past decade.
Per-capita food consumption will expand most rapidly in Eastern Europe, Asia and Latin America, where incomes are rising and populations growth is slowing. Meat, dairy products, vegetable oils and sugar should experience the highest demand increases, according to the Outlook.
Managing price volatility of food and other agriculture commodities is one priority on the top agenda of France's chairmanship of G20, which is to hold an agricultural ministers meeting on June 22-23 in Paris.
Better coordination on policy level to safeguard a stable and secure food market will be focused by G20 ministers, according to a Policy Responses report also involving work of OECD and FAO, as well as several other international organizations.
