Food Prices Remain High Despite Higher Output

High food prices have particularly hit vulnerable populations in many countries that spend a substantial part of their income on food, according to a report released today by the UN Food and Agriculture Organization (FAO).

The latest Food Outlook indicates that the food import bill of the Low Income Food Deficit Countries (LIFDCs) is expected to reach US$169 billion in 2008, 40% more than in 2007. FAO calls the sustained rise in imported food expenditures for vulnerable country groups “a worrying development,” and says that by the end of 2008 their annual food import basket could cost four times as much as it did in 2000.

International prices of most agricultural commodities have started to decline, but they are unlikely to return to the low price levels of previous years, Food Outlook reports. The FAO food price index has remained stable since February 2008, but the average of the first four months of 2008 is still 53% higher when compared to the same period a year ago.

“Food is no longer the cheap commodity that it once was. Rising food prices are bound to worsen the already unacceptable level of food deprivation suffered by 854 million people,” said FAO Assistant Director-General Hafez Ghanem . “We are facing the risk that the number of hungry will increase by many more millions of people.”

Despite a favourable global production outlook, the expected price decline in many basic agricultural commodities during the new 2008/2009 season is likely to be limited, because of the need to replenish stocks and an increase in utilization. Due to rising utilization, more than one good season is required to replenish stocks and reduce price volatility. Read the complete article.