UN: No evidence of new food price crisis

[September 06, 2012]  ROME (AP) -- Prices of basic foods remained flat in August, offering assurances that a repeat of the global food price crisis that sparked rioting several years ago is unlikely, U.N. food agency officials said Thursday.

While current prices are still high, they are lower than the levels that triggered rioting and unrest in parts of the developing world in 2007-2008. Another food crisis, in 2010-2011, also caused hardships for poorer consumers, especially in countries heavily dependent on food imports.

"This is reassuring," said Jose Graziano da Silva, director-general of the Rome-based U.N. Food and Agriculture Organization. "Although we should remain vigilant, current prices do not justify talk of a world food crisis."

The agency said that overall prices in August remained flat, compared to July's index, when prices spiked by 6 percent after three months of decline, driven by a jump in grain and sugar prices and reflecting droughts that affected corn and wheat crops.

Whether prices will rise in the rest of the year is unclear, FAO official David Hallam told reporters.

While meat and dairy prices did rise in August, sugar prices fell sharply. The agency's Cereal Price Index averaged the same as in July, with some increases in wheat and rice offsetting a slight weakening in maize, the agency said.

"Deteriorating crop prospects for maize in the United States and wheat in the Russian Federation initially underpinned export quotations, but prices eased towards the end of the month following heavily rains in areas hardest hit by drought in the United States," FAO said. Also helping to stabilize prices was Russia's announcement that it would not impose export restrictions, the U.N. agency said.

Wheat output in Russia, Kazakhstan and Ukraine was forecast to decline, but wheat production in the United States was forecast to increase to above-average levels, and record harvests are expected in India and China, the FAO said.

The agency's report said that sugar prices dropped sharply in August, in part due to better weather conditions in Brazil, the world's largest sugar exporter.

[Associated Press]

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