UN predicts rise in global cereal production but warns prices will remain high

The United Nations Food and Agricultural Organization (FAO) today predicted a rise in world cereal production this year but warned that prices will remain at record levels and could even increase.

Greater anticipated production is resulting from winter grain plantings and good weather among major producers in Europe and in the United States, coupled with a generally satisfactory outlook elsewhere, according to FAO’s latest Crop Prospects and Food Situation report.

But with dwindling stocks, continuing strong demand for cereals is keeping international prices high, despite a record world harvest last season, the report said. International wheat prices last month were 83 per cent higher than in January 2007.

Poor countries where food is scarce are expected to import less cereal but pay more, FAO said. “Cereal imports for all Low-Income Food-Deficit countries in 2007-08 are forecast to decline by about 2 per cent in volume, but as a result of soaring international cereal prices and freight rates, their cereal import bill is projected to rise by 35 per cent for the second consecutive year,” the agency said in a news release.

Worldwide, 36 countries are currently facing food crises, according to the report.