Johannesburg: Food prices are at their highest since the 2008 crisis, according to new figures released by the UN Food and Agriculture Organization (FAO). In mid-2008, international food prices reached their highest level in 30 years, sparking one of the worst food crises in recent times, toppling at least one government and pushing more than a billion people into hunger. The global average price of food - including cereals, cooking oil, meat and dairy products - was 25 percent higher in December 2010 than in December 2009, said Abdolreza Abbassian, secretary of the Intergovernmental Group on Grains at FAO.
Although the average prices of cereals such as maize, wheat and rice were 39 percent up from December 2009, they were still 13 percent below the peak reached in June 2008.
Inclement weather and price volatility propelled prices during the second half of 2010. As drought and fires raged through Russia and Ukraine, two of the world's top wheat producers, prices began to climb in July 2010. By September 2010 wheat prices had risen by between 60 and 80 percent and Russia banned exports.
Canada, another major wheat producer, was hit by bad weather. Since November, prolonged dry conditions have affected soya bean and maize crops in Argentina, also among the top producers. Floods in Australia, an important source of quality wheat, could have an impact on prices.
"I am feeling less optimistic than I was in November - we have not had much good news," Abbassian commented. "But then we could have bumper crops everywhere and the prices could collapse - you never know - but, at the same time, high prices are not going to go away and there is a strong possibility that they might remain high for two years."
High food prices spell good news for farmers, encouraging them to plant more. "But many farmers then tend to diversify, which can have an impact on the supply of one particular crop," he said.
Lack of clarity on the supply of maize in China was also worrying. "Chinese statistics show that they have had record crops but food inflation is quite high," Abbassian said. If China stepped into the market with big orders in 2011 it could upset global supplies.
He suggested that countries with bumper crops or ample stocks of staple foods should maintain strategic reserves. Food importing countries should think strategically and negotiate favourable trading terms.
Rising fuel prices, that past the US$90 a barrel mark last week, could also have an impact on food production and distribution in 2011.