Food Price Easing, But No Dramatic Drop Seen in 2012: UN FAO Chief

January 3, 2012 05:48 AM
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FAO: Volatility in food markets will continue

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

Global food prices are likely to ease further in 2012, but there won’t be a significant downturn, according to Jose Graziano da Silva, the new head of the UN Food and Agriculture Organization (FAO).

"Prices will not be going up as in the sense of the last two to three years but will also not drop down. There may be some reductions but not drastic," Graziano da Silva said. “Volatility will remain.”

FAO publishes a monthly food price index and it has posted declines since February. The FAO Food Price Index (FFPI) in November was down 1 point from October and at 215 points, the index is 23 points, or 10 percent, below its peak in February 2011 (link). However, da Silva said the declines expected for 2012 will not be as dramatic as were seen in 2009 when the FAO index dropped 37 percent over the course of 14 months.

Despite expecting a downturn in food prices, da Silva cautioned that doesn’t mean a decline in the number of people at risk for hunger. “We will have more work to do, with more people hungry, more people unemployed, and we will need new ways to assist them,” he said.

While in Brazil, da Silva headed up the “Zero Hunger” plan that then-Brazilian President Luiz Inacio Lula da Silva put in place.

The FAO’s most recent estimate of the number of people facing hunger in the world stood at 925 million in 2010, down from more than 1 billion in 2009. “I don’t expect a dramatic increase in world hunger” this year, da Silva said. “What we have is dramatic enough.”

No funding issue foreseen. Despite the sluggish global economy and the downturn in Europe, da Silva said he did not expect a funding issue to develop for FAO projects.

Comments: It will be interesting to see if da Silva, who takes over for Jacques Diouf who led the FAO for 18 years, stands by his position taken earlier this year relative to biofuels. The Financial Times reported da Silva warned against “demonizing” biofuels as he defended Brazil’s biofuels industry that uses sugarcane as its ethanol feedstock. Ethanol has often been cited as a culprit for high food prices, including by the FAO.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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