Friday, June 13, 2008

Report Forecasts Higher Food Prices for Next Decade

Report Forecasts Higher Food Prices for Next Decade
(International Herald Tribune – Andrew Martin)

Record prices for farm crops should gradually recede, but they will remain substantially higher than average over the next decade because of fundamental changes in demand, according to a report released Thursday by the United Nations and the Organization for Economic Cooperation and Development.

Because the recent spike in crop and food prices has been caused in part by temporary factors like drought, the report predicted that prices should decrease as weather conditions return to normal and crop yields improve.

"At least we hope they are temporary," said Angel Gurria, secretary general of the OECD, alluding to the potential impact of climate change on agricultural production.

The report was critical of government policies that encouraged biofuel production, saying that their environmental, energy security and economic benefits were modest at best and "sometimes even negative." And the report suggested that those policies should be re-examined in light of the current food crisis, as should government trade policies like export bans that do not allow farmers to take advantage of higher global prices for agriculture commodities. The report also encouraged countries that have balked at allowing genetically modified crops to reconsider their use as a way to improve yields.

In a related matter, the World Bank on Thursday announced that it would increase its spending on agriculture and food programs to $6 billion in the coming fiscal year, which begins July 1, up from $4 billion. The additional money includes $800 million that has already been earmarked for Africa and an additional $1.2 billion to rapidly finance things like seeds, fertilizer and irrigation for small-scale farmers, food for work programs and school feeding initiatives.

"These initiatives will help address the immediate danger of hunger and malnutrition for the two billion people struggling to survive in the face of rising food prices," the president of the World Bank Group, Robert Zoellick said, in a statement.

According to the report by the OECD and the Food and Agriculture Organization of the United Nations, released Thursday in Paris, the anticipated causes of higher than average prices during the next decade include a doubling of biofuel production, higher fuel costs that increase the cost of producing crops and food and greater demand for food and animal feed in developing countries where incomes are rising. …

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