Food prices expected to stay high

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By ASSOCIATED PRESS

PARIS (AP) | Prices for agricultural commodities are likely to remain higher than over the past decade owing to the biofuel industry's growing use of feedstock and renewed food demand in developing nations, an OECD report said Wednesday.

Prices may also be more volatile as a result of oil and energy costs and erratic weather conditions, the Organization for Economic Co-operation and Development said in its Agricultural Outlook for 2009-18.

"Because food is a basic necessity, the agriculture sector is showing more resilience to the global economic crisis than other industries," the report said.

Prices are not expected on average to remain at the current levels, which are near the record high of 2007-2008. However, they are "unlikely to fall back to their average levels before the 2007-2008 peaks," the report added.

Average agricultural prices in real terms are expected to be 10 percent to 20 percent higher in 2009-2018, compared with the 1997-2006 decade, which preceded the price peak.

The report was prepared by experts at the Paris-based OECD and Rome-based Food and Agriculture Organization.

Farmers will respond to renewed food demand from developing countries and from the emerging biofuels market by increasing supplies as an expected economic recovery takes place over the next two to three years, the report said.

"Extreme price" volatility is possible, primarily because of the effect of changing energy and oil costs on the agriculture sector, as well as erratic weather conditions, the report said.

Food insecurity and hunger remain a problem for the world's poor, but "access to food rather than food availability" is the greater problem in the longer term, the report said.

The report covered OECD member countries, as well as India, China, Brazil, Argentina and Russia, among others.