Farm Prices to Stay High

World food prices have reached a record high this year due to adverse crop weather. The increasing demand for food and fuel is expected to heighten the pressure on commodities further and introduce more volatility to the market, hurting both consumers and producers. Inherent risks such as bad weather and correlation with energy are also intensifying volatility. The impact of high food prices has been very critical to sparking political unrest across the Arab world.

• Tackling rising food prices. A forecasted rise in world grain output would not be enough to build up stocks and lower prices. The Organisation for Economic Co-operation and Development (OECD) and Food and Agriculture Organization (FAO) suggested that agriculture investment must be increased to address rising world farm commodity prices this decade.
• Benefits of high prices. Contrary to popular perception, the OECD is optimistic that high prices would also bring benefits. Rising prices are seen to introduce fresh investment to develop agriculture and meet global demand. In addition, the OECD deems high food prices as good news to farmers.
• G20 intervention. In response to rising prices, the Group of Twenty (G20) agricultural ministers are endorsing and supporting measures to improve productivity, circulate market information, and strengthen policy coordination and risk management.

Source:

“Farm prices to stay high, FAO, OECD say.” Philippine Daily Inquirer, 20 June 2011.