FAO monthly food price index expected to remain high

Feb 2 2011

The U.N. Food and Agriculture Organization's (FAO) monthly food price index for January is expected to be at a similar level to the record highs measured in December's index, Abdolreza Abbassian, an economist with the agency, said on Monday, Reuters reports. "FAO's expectation is that the January index would be very close or slightly below December," Abbassian said ahead of the release of FAO's monthly food index, which is due to be published on February 3.

"According to preliminary estimates, prices of sugar, some grains and oilseeds in January were slightly below levels seen in December, Abbassian said in a telephone interview. He said the FAO uses spot and physical prices to calculate the index and does not use futures prices which rallied in January," Reuters writes. According to Abbassian, though FAO will revise its entire index since 1990 because of a change in calculating its meat component, December 2010 and June 2008 will still be significant food price peaks on the index (Kovalyova, 1/31).

Also on Monday, senior U.N. officials attending the two-day Global Commodities Forum in Geneva "called for urgent steps to rein in the rising prices for basic farm produce, petroleum and raw industrial materials whose volatility hits the world's poorest people the hardest," the U.N. News Centre reports.  

"Such volatility has huge negative impacts on vulnerable groups, such as low-income households in developing countries, for whom food expenditure can account for up to 80 percent of household budgets," U.N. Conference on Trade and Development (UNCTAD) Secretary-General Supachai Panitchpakdi said. U.N. International Telecommunication Union (ITU) Secretary-General Hamadoun Toure and Andrey Vasilyev, deputy executive secretary of the U.N. Economic Commission for Europe (UNECE), also addressed the forum (1/31).

"Food prices have been rising worldwide, as the cost of raw materials and agricultural products surge, contributing to political unrest around the globe," CNNMoney writes in a story examining food price spikes. The story looks at why prices are rising, noting bad weather in Russia and Australia, which "severely diminished wheat crops," and changing diet preferences in China, India and other places. "The pinch has been felt most in rapidly developing countries like China, India, and Russia, which still have large portions of their population living in poverty," CNNMoney writes (Censky, 1/28).

McClatchy-Tribune/Vancouver Sun examines how the current political unrest in Egypt is related to the surging cost of food and how that could affect other parts of the world. "Soaring food prices aren't the only reason that Egyptians took to the streets to try to topple their long-serving president. But they're a significant factor, and a steady surge in global commodity prices reminiscent of 2008 is sure to bring new battles over food security this year," the news service writes before looking at the different events that have contributed to recent food price spikes.

In addition to the effects of weather and demand, "[a] third explanation that's gaining acceptance is that the U.S. Federal Reserve inadvertently exacerbated the price picture for grains and other commodities," the news service writes. Egypt is the eighth-largest export market for U.S. farmers and most of that consists of wheat sales, "since the country is the world's leading wheat importer. American wheat and corn are sold across North Africa and the Middle East, prompting worries by U.S. farmers that Egypt's problems will spread throughout the region," McClatchy-Tribune/Vancouver Sun reports. "Wheat prices have risen by more than 70 percent over the past 12 months, and corn prices climbed in mid-January to their highest level since July 2008," the news service adds (Hall, 1/31).

Meanwhile food manufacturers and government representatives are meeting in Jordan on Tuesday to discuss food security in the Middle East at the Arab Food Industries and Franchising Forum, The National reports. The meeting "comes at a particularly volatile time in the region. Protesters in Tunisia, Egypt, Jordan, Yemen and Oman have taken to the streets, and soaring food prices coupled to the cost of living are high on their agendas as their governments struggle to respond to these grass-roots problems."

"It was catastrophic this year," said Hayssam Jaffan, president of the Arab Federation for Food Industries, who spoke at the forum. "Governments have to implement new rules and provide aid to their people to minimise the gap between cost of living and salaries," Jaffan said. The forum will also look at the use of water in agriculture (Detrie, 2/1).

FAO Executive-Director Candidates Announced

The FAO on Tuesday identified candidates "vying to become" the agency's new director-general during elections, scheduled to take place in June, the Associated Press/Washington Post reports.  

The candidates are: "Franz Fischler of Austria, formerly an EU agriculture commissioner; Brazil's Jose Graziano da Silva, already assistant general-director at FAO; Indroyono Soesilo, an Indonesian government official; veteran Iranian diplomat Mohammad Saeed Noori Naeini; Abdul-Latif Jamal Rashid, an ex-minister of water resources in Iraq; and Spain's ex-foreign minister Miguel Angel Moratinos," the news service writes (2/1). "The new director-general will take over on January 1, 2012 from Jacques Diouf, from Senegal, who has been in office since 1994," Deutsche Presse-Agentur/M&C reports (2/1). "The election of a new director general will take place in a secret ballot to be held at the beginning of the 37th FAO Conference, to be held in Rome from June 25 to July 2," Agence France-Presse/Jakarta Globe reports (2/1).