Era of falling food prices ends as population soars

The era of falling food prices has come to an end with the world’s population set to rise by 2bn people, according to US farm commodities trader, Cargill Inc.

The UN’s Food and Agriculture Organisation has said global food output must rise 70% by 2050 to feed a global population expected to grow from 7bn to 9bn, and as increasingly wealthy consumers in developing economies eat more meat.

Food prices tracked by the FAO climbed to the highest ever a year ago on surging grain prices.

“You don’t have to be a reviving bull on commodities to believe that the era, which went from the 50’s, 60’s to 70’s and early 80s, of ever decreasing food prices in real terms has probably come to an end,” said Paul Conway, vice chairman of Cargill, at the Kingsman sugar conference in Dubai.

The FAO food-price index averaged 228 points last year, 23% more than in 2010 and above the 200 points recorded in 2008, when food riots erupted from Haiti to Egypt. Prices since then have declined 11% by December.

Cargill, trades all kinds of farm commodities, including cocoa, soybeans, corn, sugar, meat, wheat and ethanol. Wheat has doubled since the end of 2005, raw sugar is twice the price in December 2008 and orange juice climbed to a record last month.

Group of 20 farm ministers agreed to a plan last year to set limits on export bans and create a crop database to tackle rising food prices.

As many as 925m people already faced hunger in 2010, based on the FAO’s estimates. In response to the 2008 food price crisis, countries from India and Egypt to Vietnam and Indonesia banned rice exports, a staple for half the world.

Bloomberg