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Record food prices are likely to be sustained this year because of high oil costs and smaller harvests, said the United Nations Food & Agriculture Organization.
“The potential risk is crude oil may continue to go higher, and if floods and drought happen again, we’ll face further price increases,” Hiroyuki Konuma, the FAO’s regional representative in Asia, said in an interview Wednesday. “Now we’re in a much better situation than the crisis in 2008.”
Global food costs rose to an all-time high in February, according to an index compiled by the FAO. The increase has contributed to riots across North Africa and the Middle East that toppled leaders in Egypt and Tunisia. Prices surged as bad weather ruined crops from Canada to Australia and Russia banned grain exports after its worst drought in a half-century.
“We will get an increase in production but not sufficient to ease the market,” said Abdolreza Abbassian, a senior FAO economist. “High, volatile prices will continue in 2011 and even in 2012,” he said in a video briefing Wednesday.
An index of 55 food commodities rose 2.2% to a record 236 points last month, from 230.7 in January, the UN said March 3. Wheat rose 60% in Chicago in the past year, corn gained 92% and rice added 5.4%.
Turmoil in oil-producing countries including Libya has pushed crude above $100 a barrel. Higher crude prices make biofuels produced from crops more competitive, while raising the cost of tractor fuel and fertilizer for farmers.
Global food prices probably will rise in the first half of this century because of an expanding population and higher incomes, slower crop-yield growth and the effect of climate change, Ross Garnaut, the Australian government’s climate-change adviser, said last week in Canberra.
Corn and wheat are under pressure from supply shortages as climate change and natural disasters have reduced production, leading to higher food prices, Konuma said.
“We have to be extremely cautious about what is going to come in 2011-2012,” Konuma said in Bangkok. “Spring is going to be extremely critical, when farmers will decide what crop they’re going to plant. In many major producing regions, we have already hit maximum acreage. So the war is going to go on in terms of acreage.”
Food Security
Wheat production is estimated to total 645.4 million tons, lower than the forecast 662.7 million tons of demand for the year 2010-2011, according to the U.S. Department of Agriculture.
Corn output is estimated at 814.3 million tons, compared with 836 million tons of demand, while rice production is estimated at 451.6 million tons, slightly above the consumption of 451 million tons, it said.
Investments in agriculture to boost production and productivity are important to improve food security, Konuma said. About 947 million people still live in poverty in Asia, according to the FAO.
World food production will have to increase by 70% by 2050 to meet increasing demand from an expanding global population, which is projected to rise to 9.1 billion by 2050 from 6.9 billion at present, Konuma said.
Rice prices rose to records in January in Indonesia, the world’s fourth-most-populous nation, prompting the government to suspend import duty on the grain, FAO said last week. Prices remained at record highs last month in Bangladesh, the largest South Asian rice buyer, because of low inventories, according to the report.
North Korea and Afghanistan also face the risk of food shortages and rising prices, Konuma said.
“Rising food prices put pressure on inflation and will have an impact on income and economic expansion,” Javed Hussain Mir, the Asian Development Bank’s director of Southeast Environment, Natural Resources and Agriculture Division, said in a seminar in Bangkok.
" CAD - New housing price index rose slightly in January "..
" Toronto and Oshawa builders reported increased prices as a result of good market conditions " ...
Prices for new homes in Canada rose 0.2 per cent in January from a month earlier, with increases noted in Winnipeg, Quebec City, Toronto, Oshawa, Ont., and Montreal.
"In Winnipeg, prices rose as a result of builders introducing new list prices in January," Statistics Canada said today.
"In Toronto and Oshawa, builders reported increased prices as a result of good market conditions. "In Quebec and Montreal, the increases were mainly attributed to higher material and labour costs."
Year over year, house prices were up 1.9 per cent, the federal statistics gathering agency said.
Separately today, a new Conference Board of Canada report predicted the third year in a row of slower profits for Canadian builders.
“New mortgage lending rules, elevated levels of consumer debt, and anticipated mortgage rate increases are some of the factors restricting new home sales this year,” said the group's associate director Michael Burt.
“Demand will begin to pick up next year as the effects of lending policy changes fade. But housing starts are not expected to return to pre-recession levels of more than 220,000 units per year.”
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