UN says food prices to rise up to 40%

Growing demand from emerging markets and for biofuel production will send prices soaring, according to the OECD and the UN Food and Agriculture Organisation

Farm commodity prices have fallen from their record peaks of two years ago but are set to pick up again and are unlikely to drop back to their average levels of the past decade, according to the annual joint report from Paris-based thinktank the OECD and the UN Food and Agriculture Organisation (FAO).

The forecasts are for wheat and coarse grain prices over the next 10 years to be between 15% and 40% higher in real terms, once adjusted for inflation, than their average levels during the 1997-2006 period, the decade before the price spike of 2007-08. Real prices for vegetable oils are expected to be more than 40% higher and dairy prices are projected to be between 16-45% higher. But rises in livestock prices are expected to be less marked, although world demand for meat is climbing faster than for other farm commodities on the back of rising wealth for some sections of the population in emerging economies.

Another factor driving up food prices is the controversial biofuelsindustry. The report predicts that continued expansion of biofuel output – often to meet government targets – will create additional demand for wheat, coarse grains, vegetable oils and sugar.