Food prices may have ‘bottomed out': FAO

Grain and oilseed prices may be set to rise in 2010 after having “bottomed out” earlier this year, a Food and Agriculture Organisation economist said.

The organisation’s food-price index climbed to its highest in a year last month, pointing to further price gains, said Abdolreza Abbassian, a senior economist for the United Nations branch that fights hunger. Prices usually fall in October as crops are harvested in the northern Hemisphere, he said.

“We didn’t expect prices in October to go up, and yet they did,” Abbassian said in an interview in Santiago today. “It is an indication that perhaps grain prices have bottomed out.”

Food prices rose to records last year, sparking riots from Bangladesh to Haiti. Abbassian expects the food-price index to remain “firm” for the rest of the year. Prices are unlikely to return to their 2008 records because stockpiles are higher than last year, Abbassian said.

Grain prices may increase as global economies rebound and boost demand for meat and dairy, and also feed grains, Abbassian said. The International Monetary Fund said Oct 29 that Asia is rebounding and growth will probably accelerate to 5.8 per cent in 2010 from 2.8 per cent this year, as governments in the region pump more than $950 billion into their economies to stimulate expansion.

Corn prices may also gain as rising oil prices boost the attractiveness of ethanol as an alternative fuel supply.

The FAO met in Santiago this week to discuss global food security issues. Parts of the world in coming decades that have larger concentrations of poor residents in urban areas might become hot spots for food shortages, said Josef Schmidhuber, head of the global perspective studies unit of the FAO.

“Larger price swings, more urban food and poverty concentration could make food riots a more frequent feature in the future,” he said in a debate at the FAO’s Latin American office in Santiago yesterday.

The FAO needs to identify areas where potential food shortages may occur to prevent them, Schmidhuber said. The world is able to produce enough food for population growth through 2050, he said.