Rome: Food commodities prices are likely to stay high and volatile in the medium term, while a repeat of the 2007-2008 price spikes is seen as a realistic possibility, the UN Food and Agriculture Organisation (FAO) said on Monday.
Between 2006 and 2008, international prices for basic food commodities shot up by 60% while grain prices doubled.
By mid-2008, food prices on international markets reached their highest level in nearly 30 years, causing riots and hoarding in some countries and sparking a drive by import-dependent rich nations to secure farmland mainly in poorer countries.
The food price spikes caused a sharp rise in the number of hungry people around the world to more than 1 billion this year.
While prices have fallen back since, they remain high and are not likely to dip below their 2006 level, FAO said in a report discussed at a forum of 300 agriculture and development experts in Rome on Monday and Tuesday.
“Available mid-term to longer-term projections ... indicate that prices may stay above pre-2006 levels, at least in the medium term,” the report said. Graphics published in the report showed prices for commodities such as wheat, rice, oilseeds, raw and refined sugar were expected to hold above pre-2006 levels through to 2018.
FAO, which is hosting a world food summit next month, said the global food commodities market was also likely to remain volatile “in the foreseeable future” and a new surge in prices like the one seen in 2007-08 was a “realistic possibility”.
“I would say it’s almost inevitable,” said Homi Kharas, a senior fellow on global economy and development at Brookings Institution and one of the panelists at the forum.
He said that the factors which led to the food price crisis last year - droughts, volatile energy prices, US dollar instability and market speculation - all threatened to push prices up again.
That helped keep the situation of supply and demand tightly balanced and vulnerable to even a single shock - be it a crop shortfall, commodity speculation or short-term oil price rises.
FAO said that while overall demand growth was forecast to slow further globally, demand for some income-sensitive products will grow faster.
Insufficient investment in productive capacity, and further demand growth for biofuels were also factors that could keep prices firm in the medium term.
FAO says the world needs to produce 70% more food by 2050, and invest $83 billion a year, to feed a growing population that is estimated to top 9 billion people by then.