World commodity prices will continue to rise higher this decade, supported by burgeoning demand for food and fuel as well as knock-on effects from energy costs.
But a UN Food and Agriculture Organisation (FAO) and the OECD report says prices of major farm commodities should ease somewhat from the highs seen in the past year as the recent spike should spur farm output.
"Commodity prices should fall from the highs of early 2011, but in real terms are projected to average up to 20 percent higher for cereals (maize) and up to 30 percent for meats (poultry) over the 2011-20 period compared to the last decade," said the report, released ahead of a G20 agriculture ministers summit in Paris next week.
World food prices hit a record high earlier this year, triggered mainly by bad weather, reviving memories of soaring prices in 2007-2008 that sparked riots in countries such as Egypt, Haiti and Cameroon.
French president Nicolas Sarkozy, head of the G20 leading economies, is gunning for a summit deal imposing tough new rules on speculators, whom he blames for the surge in food prices which have gained nearly 40 per cent over the past 12 months.
Most food commodities were set to see increased average prices in real terms versus the past decade while all were expected to rise in nominal terms, the report said.
A recovery in agricultural stocks after a drawdown that fuelled high prices in 2010/11 will be limited by production constraints such as declining yield growth and rising input costs, the bodies said in their joint Agricultural Outlook 2011-2020 report published today.
Global agricultural output was projected to grow at 1.7 per cent annually on average in the next 10 years, down from 2.6 per cent in the previous decade, reflecting lower crop growth.
"The global slowdown in projected yield improvements of important crops will continue to exert pressure on international prices," the report said, adding this would be partly offset by productivity gains in emerging countries.
The FAO warned in a separate report last week that a forecast rise in world grain output this year would not be enough to build up stocks and bring much lower prices, even if its world price index has eased from a record high in February.
Rising costs of inputs like fertilisers and other farm chemicals sensitive to oil prices would also curb output by pressuring profitability.
Like in their joint outlook last year, they pointed to growing use of grains in biofuels as contributing to price pressure by reinforcing a link with energy markets and by raising demand for foodstuffs like maize and vegetable oils.
Together with other international organisations, they have called on the Group of 20 leading economies to end subsidies for biofuels in order to help rein in food costs, adding their voice to a fierce debate over biofuels that has been framed by critics as a question of "food versus fuel.
Meat prices in real terms would also stay on a higher level, supported by growing demand in developing countries and as rising input costs limit price-driven herd expansion.
Reuters
