FAO: High prices

08/06/2011 15:50

Food and Agriculture Organization predicts that food prices in
international markets will remain high and unstable, despite the fact
that production level is expected to break records this year.

In its latest report, FAO says that there is an increasingly demand for food products, which means that all production will be consumed, causing high prices to remain unchanged. According to FAO, the index of food prices calculated by them was 232 in May, only 6 points below the record breaking February index of 237 points.

For FAO, this means that cost of food imported goods, especially in poor countries, will increase by 30%. This means that there will be an increase of 18%, compared to one year ago, while the world average is 7%.

David Hallam, director of FAO, declared:

“The general production situation for agriculture cultures and goods is difficult, with prices that remain persistently in very high levels, representing a risk for creating great food deficits in countries with low incomes”.

FAO says that although food production chances are encouraging for some countries like Russia and Ukraine, weather conditions might impede the production of wheat and corn in Europe and Northern America.

FAO report says that by the end of the year there was a good chance for prices to return in their low values. But besides the weather, other factors like Japan disasters and turmoil in Northern Africa and Middle East has caused oil prices to increase, directly affecting the production cost of foods and transport.

The speculative role of the market has also affected price increase, says FAO, which demands more transparency in the market.

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