Food prices expected to drop, but not much

PARIS - World food prices are set to fall from current peaks in coming years, but will remain "substantially above" average levels from the last decade, according to a report released yesterday.

The world's poorest nations are most vulnerable - particularly the urban poor in food-importing countries - and will require increased humanitarian aid to stave off hunger and undernourishment, according to the joint agricultural report by the Organization for Economic Cooperation and Development and the U.N. Food and Agriculture Organization.

"Rising prices now translate, unfortunately, as an increase in hunger and civil strife. Uncertainty rules and our people are worried," U.N. Food and Agriculture chief Jacques Diouf said at a Paris news conference.

OECD Secretary-General Angel Gurria, at his side, said: "The end of cheap food in a world where half the population lives with less than two dollars a day is a source of grave concern."

High oil prices, changing diets, urbanization, expanding populations, flawed trade policies, extreme weather, growth in biofuels production, and speculation have sent food prices soaring worldwide, triggering protests from Africa to Asia and raising fears that millions more will suffer malnutrition.

The report was based on a forecast of the cereals, oilseeds, sugar, meat, milk and dairy-products markets for the period 2008 to 2017. It reflects agriculture and trade policies in place in early 2008 and includes an assessment of the biofuels markets for bioethanol and biodiesel.

Despite the recent price increases, general price levels have remained "remarkably stable," suggesting that inflation in the coming decade will "remain low," the report said.

"We do not expect the current price levels to last. But the average of most agricultural commodity prices over the next 10 years will still exceed the average of the previous decade by 10 to 50 percent, depending on the commodity," Gurria said.

Compared with the previous decade, the report said, average prices from 2008 to 2017 for beef and pork would rise 20 percent; sugar, around 30 percent; wheat, maize and skim-milk powder, 40 percent to 60 percent; butter and oilseeds, more than 60 percent; and vegetable oils, more than 80 percent.

Besides investing in agriculture, the report recommends helping poorer countries diversify their economies and improve governance and administrative systems.