Experts at a United Nations meeting today ruled out a looming world food crisis, but acknowledged that unexpected price hikes could threaten food security and recommended exploring measures to prevent the sudden price upswings.
“Global cereal supply and demand still appears sufficiently in balance,” the experts from more than 75 Member States of the UN Food and Agriculture Organization (FAO) said at the end of a day-long special meeting in Rome, the agency’s headquarters.
“Unexpected crop failure in some major exporting countries followed by national policy responses and speculative behaviour rather than global market fundamentals have been the main factors behind the recent escalation of world prices and the prevailing high price volatility,” they said.
The conclusion of the Inter-Governmental Groups on Grains and on Rice, came as FAO issued a report showing that international wheat prices soared by between 60 and 80 per cent since July, while those of maize spiked by about 40 per cent.
Among the root causes of the price volatility, the meeting identified “growing linkage with outside markets, in particular the impact of ‘financialization’ on futures markets.”
Other causes were listed as insufficient information on crop supply and demand, poor market transparency, unexpected changes triggered by national food security situations, panic buying and hoarding.
The Inter-Governmental Groups recommended exploring “alternative approaches to mitigating food price volatility” and “new mechanisms to enhance transparency and manage the risks associated with new sources of market volatility.”
Some of those issues will be considered at an upcoming meeting of the FAO’s Committee on World Food Security.
Other proposals included intensifying FAO’s information-gathering and dissemination at all levels.
The meeting urged capacity-building in areas such as the monitoring of planting intentions, crop development, domestic market information and the different dimensions of futures markets behaviour, including the involvement of non-commercial traders.
Meeting participants recalled that at the 2009 World Summit on Food Security hosted by FAO, Member States had agreed that countries should refrain from taking measures that are inconsistent with the rules of the World Trade Organization (WTO).
Data on the most recent grains price increases is contained in FAO’s quarterly report on the cereals supply and demand outlook, the Crop Prospects and Food Situation, published today.
It forecasts this year’s global cereals production at 2,239 million tons, only one percent lower than last year and the third largest crop on record. Reduced output of grains in the Commonwealth of Independent States (CIS) countries accounted for most of the decline.
In contrast with the steep increases in wheat and maize prices, the report said rice prices rose by only seven per cent from July to September. But even at these higher levels, cereal prices were still one third below their peaks in 2008, FAO noted.
Those to be most affected by higher international wheat prices will be importing countries where wheat is a main staple, the report said. They include countries in the Near East and North Africa – particularly Egypt, the world’s biggest importer – the CIS, Asia and South America.