Food prices set to rise faster over next decade

According to the UN’s Food and Agriculture Organisation (FAO) and the OECD, food commodity prices will increase more than previously expected over the next decade because of rising energy prices and the rapid growth of developing countries.

A return to higher economic growth and population growth are expected to increase demand, combined with a shift in diet in developing countries from traditional foods to more meats and processed foods.

Additionally, higher prices for crude oil would put push prices further upwards in regions such as the US and Europe, where energy inputs such as fertilisers are used intensively.

Angel Gurría, secretary-general of the OECD, said all indications pointed to a “period of high prices”, although these would be below the peaks of the 2007-08 food crisis when prices spiked to record levels, triggering riots in countries from Bangladesh to Haiti.

The forecast of high prices is likely to exacerbate concerns about global food security. Last year the number of chronically hungry people rose above 1billion and agriculture is drawing more attention from policymakers, particularly in the US. Earlier this year the OECD organised its first ministerial meeting on agriculture for 12 years.

Countries that are highly dependent on food imports (such as Saudi Arabia and South Korea) are thought likely to buy up even more overseas farm land as a way to secure their long-term food supplies.

Cereal prices are expected to rise around 15-40 per cent in real terms, relative to the 1997-2006 average. This is up from last year’s forecast of a 10-20 per cent rise. Vegetable oils are expected to be more than 40 per cent higher, against last year’s forecast of a 30 per cent increase. Meat and dairy products will also be more expensive over the next decade, reversing a forecast last year that pointed to lower prices.

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