Food commodity prices will remain high by historical standards over the next decade but ease back to well below current peaks, says a report to be published next week by the OECD and the UN Food and Agriculture Organization. The report will offer little comfort to some of the world's poorest countries, already hit this year by riots and protests over the soaring cost of food staples such as rice, nor to the urban poor in developed countries, nor to the policymakers of countries struggling to contain inflation. Between 2008 and 2017, growing demand will continue to keep prices above historical levels even if well below current peaks, the OECD-FAO Agricultural Outlook, concludes, according to a document summarizing the report's findings. The full report is due to be released on June 29, but a document seen by Reuters contained many of the main elements. “On average over the coming 10-year period, nominal prices for cereals, rice and oilseeds are expected to be 35 percent to 65 percent higher than on average in the past ten years,” the document said. “Prices in real terms are projected to be 10 percent to 35 percent higher than in the past decade,” it added. Prices for many of those commodities doubled between 2005 and 2007 and continued to climb in 2008, it noted. As for the impact in developing countries, the conclusion of the Rome-based FAO and the Paris-based Organization for Economic Co-operation and Development, as summarized by the document, was grim: For the urban poor and the major food-importing developing countries, the impacts will be strongly negative as an even higher share or their limited income will be required for food.” Every 10 percent rise in the price of all cereals including rice added $4.5 billion to the food bill of countries which are net importers of such basic food commodities, the document noted. The impact in richer, developed countries would be more modest because agricultural commodity prices amounted to a smaller amount of final retail prices for food. “Of course, these averages mask the much more significant impacts on lower income consumers. In addition, and to the extent that high prices persist and hence do not reduce the future rate of inflation, indirect economic impacts might also be important,” the document said.
