Food prices will be high and volatile for the next decade, driven by rising incomes in emerging nations and demand for biofuel, a joint OECD and FAO report forecast on Friday, June 17.
Although prices will probably fall from high levels reached earlier this year, long-term price increases of up to 20 percent for cereals and 30 percent for meat can be expected, the Organization for Economic Cooperation and Development and Food and Agricultural Organization warned, AFP reported.
"A slow growing supply set against expected high demand underlies the projection of high and more volatile agricultural commodity prices," they said in their Agricultural Outlook 2011-2020.
The report forecasts that higher energy prices and limits on land and water resources will constrain increases in yields and overall production, while growing populations and rising incomes in emerging nations such as China and India will sustain strong demand.
"These developments, coupled with the implementation of biofuel mandates have increased demand and made processors and consumers much less responsive to high commodity prices," said the OECD and FAO report. "Weather-related crop yield variations are expected to become an even more critical driver of price volatility in the future."
Although the OECD and FAO believe commodity prices will likely fall from peaks hit earlier this year, they forecast the price of fish, pork, and cheese to be 10 percent higher this decade in real terms than in the last decade.
They foresee price rises of 15 percent for rice; 20 percent for maize, vegetable oils and sugar; 30 percent for poultry, and nearly 50 percent for butter.
The OECD and FAO expect global agricultural production to grow at 1.7 percent annually on average over this decade, down form 2.6 percent last decade. Production per capita is still projected to rise 0.7 percent annually.
