Global food prices reached a record high in December 2010, outpacing 2008 levels that prompted riots in 61 countries, according to a new “Crop Prospects and Food Situation" report from the United Nation’s Food and Agriculture Organization (FAO).
FAO economist Abdolreza Abbassian warned prices of corn, wheat and other grains may increase drastically due to by the unpredictability of current weather, given the already high price levels and low supply of some grains.
"There is still room for prices to go up much higher, if for example the dry conditions in Argentina tend to become a drought, and if we start having problems with winterkill in the northern hemisphere for the wheat crops," he said.
The FAO food price index, which measures monthly price changes in a basket of foods including cereals, oilseeds, dairy, meat and sugar, averaged 215 in December 2010—an increase for the sixth consecutive month and the highest since 1990.
According to the report, sugar, cereals and oil were the driving force in the price increase. Droughts in Russia and "many other unexpected developments that hit crops around the world" also added to the rise. The cost of food was up 25 percent in December 2010 from the same time the previous year. The year-on-year rise compares with the 43 percent jump in food costs in June 2008. Record prices for fuel, weather-related crop problems, increasing the demand from the growing Indian and Chinese middle classes, and the push to grow corn for ethanol fuel all contributed to the crisis that year.
FAO estimated that global food production will have to increase at least 70 percent by 2050 as the world population expands to 9.1 billion from about 6.8 billion last year.
Sources:
* Bloomberg: UN Food Price Index tops records dating to '90
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