Food-Price Declines Won’t Help Feed Hungry as Dollar Strengthens
October 07, 2011, 7:45 AM EDTBy Tony C. Dreibus
Oct. 7 (Bloomberg) -- Lower food prices may be of no help to the world’s hungry people because a stronger dollar might limit purchasing power, according to the United Nations’ Food and Agriculture Organization.
The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, climbed the most last month since October 2008 as investors sought a haven from the European debt crisis. A UN food-price index fell in September to 224.98, the lowest level since December, the FAO said in a report yesterday.
“If the dollar were to appreciate or strengthen against the importing country’s currency, then some or all, depending on the change, of the benefit of lower prices may be lost to the rising dollar,” Abdolreza Abbassian, a senior economist at the FAO, said yesterday. “The U.S. dollar’s relation to food prices is often overlooked.”
A gauge of cereal prices dropped to 245.09, the lowest level since January, FAO data show. A strengthening dollar makes crops from the U.S., the world’s biggest exporter of corn and wheat and third-largest shipper of rice, more costly to overseas buyers using their own currencies.
“The dollar has been a factor, especially with grains, because the U.S. has been such a big player in agriculture,” Abbassian said.
1 Billion People
Higher food costs have sent “tens of millions of people” into poverty since late 2010, and the world’s hungry people may soon exceed 1 billion again, Oxfam International said Aug. 3. The number of malnourished people in the world fell last year to 925 million from 1.02 billion in 2009, according to the FAO.
World food output will have to rise 70 percent by 2050 as the global population climbs to 9.2 billion from an estimated 6.9 billion in 2010, the FAO estimates. Prices of staple foods including corn will more than double in two decades without action, Oxfam said in May.
World cereal production will climb to 2.31 billion metric tons in 2011-12, the FAO said in a separate report yesterday, raising its estimate by 3 million tons on increased forecasts for wheat and rice production.
--With assistance from Rudy Ruitenberg in Paris. Editors: Dan Weeks,
To contact the reporter on this story: Tony C. Dreibus in London at tdreibus@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.
