Bloomberg News

Food Prices to Remain High, Price Swings to Continue, FAO Says

October 10, 2011

Oct. 10 (Bloomberg) -- Food prices will likely remain high and fluctuating as demand rises because of economic growth, a growing population and greater use of fuel made from crops, the United Nations’ Food and Agriculture Organization said.

Food supply faces a challenge of increasingly scarce resources as well as falling rates of yield growth, particularly for rice and wheat, the Rome-based FAO said in a report on global hunger published today.

Higher food prices helped drive 44 million more people into poverty since June 2010, the World Bank has said. The FAO’s world food-price index was at 225 points in September, down from a record 237.7 points in February and remaining 16 percent above its year-earlier level of 194 points.

“Demand from consumers in rapidly growing economies will increase, population continues to grow, and any further growth in biofuels will place additional demands on the food system,” the FAO said. “Food price volatility may increase because of stronger linkages between agricultural and energy markets, as well as an increased frequency of weather shocks.”

The FAO said it’s revising its methodology for estimating undernourishment, and didn’t provide the number of hungry people in the world in 2011 or an updated figure for the past two years. The number of people facing hunger declined to 925 million in 2010 from more than 1 billion in 2009, the UN agency has said previously.

Short-term price changes can have long-term impacts on development, the FAO said. Food-price swings may lead to decreased nutrient intake for young children that can cause a permanent reduction in cognitive capacities and therefore earnings potential, according to the report.

Child malnutrition means “an increased likelihood of future poverty, with negative impacts on entire economies,” the FAO said.

--Editors: John Deane, Claudia Carpenter

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net.

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.


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