Food could cost more in 2011

Wednesday, 17 November 2010 23:08 -     - {{hitsCtrl.values.hits}}

Johannesburg (IRIN): If wheat and maize production do not rise substantially in 2011, global food security could be uncertain for the next two years, the UN Food and Agriculture Organization (FAO) has warned.

Wheat and maize prices have shot past their 2009 highs, with FAO adding that international food import bills could surpass one trillion US dollars in 2010. Food imports last topped the trillion dollar mark during the 2007/08 food price crisis.

The organization anticipates that world cereals stocks will shrink by seven percent, with barley declining 35 percent, maize by 12 percent and wheat by 10 percent.

Cereal stocks are not as low as they were in 2007/08, “but we are being slightly alarmist in our outlook to get production figures up next year,” said Abdolreza Abbassian, secretary of the Intergovernmental Group on Grains at FAO. “Stocks of yellow maize, which is used largely for animal feed, are getting to the low level they were in 2007/2008.”

Six percent more maize will have to be produced in 2011 than in 2010, while wheat stocks need to rise by more 3.5 percent to ensure the world has enough reserves to tide it over 2011, said the FAO Food Outlook, released on 17 November.

“We not only need to replenish our stocks in 2011 but we need to do better than that to ensure we have stocks to last us in 2012,” said Abbassian. FAO calculations have not taken into account the possibility of unfavourable weather conditions next year.

“We are assuming we will have normal growing conditions, but if we have heavy rains or drought in some of the cereal-producing countries we could be in trouble, or if we have great growing conditions production could go up by more than expected levels,” Abbassian said.

Global wheat and barley stocks declined in 2010 as severe drought and fires slashed production in Russia and Ukraine two of the world’s largest producers. The news drove up wheat prices by 45 percent and even 80 percent in the second half of 2010, with an export ban imposed by Russia adding impetus. Canada, another major wheat producer, was also hit by bad weather.

World wheat inventories are forecast to fall to 181 million tonnes, 10 percent below the 2010 level but still 25 percent above the critically low level of 2008, the Outlook said.

Maize stocks are already low as production slipped in the United States, the world’s largest producer, while demand continued to grow. “With soya beans fetching good prices at the moment, many farmers in the US tended to devote more of their land to soya beans, which affected maize yields,” said Abbassian.

The pressure on wheat prices affected maize, forcing prices up 50 percent from 2009 levels.  

Fortunately, stocks of rice - the staple consumed by more than half the world’s population - are adequate, but prices could come under pressure if other cereals become more expensive in 2011, according to FAO’s Outlook.  Global cereal prices were not going to come down at any time soon, Abbassian commented, and “It is still very early to predict how much farmers will plant in 2011 - so still a lot of unknowns.”

FAO sees more wheat in 2011/12 but warns on supply

Milan (Reuters): Wheat plantings in Europe and the United States are rising in response to this year’s lower global harvest, but the world must remain on the alert for future shortages, the United Nations’ food agency said on Wednesday.

The FAO cut its estimate of 2010 world cereals output to 2.216 billion tonnes from its previous forecast of 2.239 billion tonnes.

Ample supplies of rice, wheat and white maize, the most important staple food crops in many vulnerable countries will lessen the risk of a repeat of the 2007/08 food crisis with riots and panic buying in the current season, it said.

“With the pressure on world prices of most commodities not abating, the international community must remain vigilant against further supply shocks in 2011 and be prepared,” the FAO said. The FAO, which forecast rising grain output in its previous Food Outlook which was published in June before Russia’s drought, trimmed its view in September.

Output of maize, the major coarse grain grown worldwide, was expected to rise only 1 percent to 831 million tonnes, the FAO said cutting its earlier forecast due to a projected 3 percent fall in the U.S. production.

Global sugar output was expected to rise 7.8 percent to 169 million tonnes in the 2010/11 season, but given strong global demand, international prices were likely to remain high and volatile in the coming months.

The global oil crop output was seen at 454 million tonnes, little changed from last season, with expected falls in soybean, rapeseed and copra output offset by higher production of cottonseed, groundnut and palmkernel.