Food Outlook Improved but Future Remains Uncertain
Kim Lewis June 07, 2011
A new report shows an improved world food outlook but uncertainty about the future. The Food and Agriculture Organization [FAO] Tuesday released its latest Food Outlook. Food prices are just finishing a season where markets have been tight because of the unstable world economy. The FAO says the next few months will be critical.
“We would have markets slightly more relaxed in 2010-2011, and therefore, prices slightly lower,” said Abdol Reza Abbassian, grain analyst for the FAO in Rome. “But slightly lower prices don’t make low prices. What we see in terms of supply at hand and the projected amount in the coming months into 2012, we do see prices [remaining] high.”
Abbassian said the number for the food import bill for 2011 is expected to be near 1.3 trillion, a 30% increase from last season.
“Now when you look a bit deeper you will see that the 30% increase in the import bill, which is the biggest of all increases, occurred in the least developed countries and countries with very low income,” he said.
In these countries, where people spend so much of their money on food, it results in a greater hardship for a big portion of the population. This would be the case, he said, even if governments decided not to pass the cost down to the consumer.
He explained that they might do that “because of fear of instability and other problems, [but consumers] still would have to pay for the imports. Somewhere along the line, the balance of their payment situation would deteriorate.”
While almost all foods, including grains, meats, dairy and fish, are expected to remain high in the 2011-2012 forecast, Abbassian said corn production could be problematic. He noted the strong demand for corn and said the world’s biggest producer, the United States, has had a decrease in production, due to some extent to the weather. Wheat production could also decline further in 2012, he said.
“These two crops, which are also extremely important crops for many countries around the world as food staples, are more on the forefront,” said Abbassian. He said the problem is not so much the availability of food but access to it.
He said not only are the prices higher “than we are used to,” but also “everyone expects these prices to remain at this level for the foreseeable future.”
He said the high prices are also an indication that farmers are probably not investing enough in their farms. “When asked why not, they may tell you prices are not high enough,” said Abbassian, who noted that it’s a vicious cycle.
He said the low prices that prevailed for many decades have done tremendous harm to productivity and agricultural systems, especially in developing countries. High prices may in some way remedy the problem, said Abbassian, but it will be a long transition.
He said what needs to be done is to make sure the most vulnerable have access to food supplies.
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