FAO: Higher food prices here to stay

by **hlk** Thu 14 Jul 2011, 08:00

KUALA LUMPUR: Higher food prices and volatility in commodity markets are here to stay, said United Nations Food and Agriculture Organisation (FAO).

And this is a worry for Malaysia as its rice production is only enough to cover 70 per cent of what is consumed.

Last month, the FAO Food Price Index rose slightly to 234 points, 4 per cent below its all-time high in February 2011.

"Supply has not kept up with demand for food. Global population continues to burgeon with more mouths to feed. This is a big problem.

"Prices are not likely to come down to pre-crisis level in the next 10 years. Food production will have to increase significantly to fight rising prices," FAO policy officer at the regional office for Asia and the Pacific Dr Sumiter Singh Broca said.

He highlighted that higher prices for commodities are being passed through the food chain, leading to rising consumer price inflation in most countries.

"The world is running out of suitable land and greater urgency is now needed for governments to invest in agriculture to boost yields," he said.

Malaysian Agriculture Research and Development Institute (Mardi) director Tengku Mohd Ariff Tengku Ahmad urged the government to step up investments to raise farming productivity.

"The era of cheap food is over. On an average, Malaysians spend 30 per cent of their income on food and beverage. We're still only able to produce 70 per cent of our rice needs. We really need to step up paddy farming productivity for the sake of our food security," he said.

Sumiter and Tengku Ariff were speaking to reporters at the Malaysia International Food Beverage Trade Fair 2011 held here yesterday.

Sumiter highlighted that export prices of rice, which have been declining since February, rebounded last month. The benchmark Thai rice price (Thai white rice 100% B) averaged US$524 (RM1,572) a tonne, 5 per cent higher than in May.

Asked on the immediate outlook for food staples, he said although prospects of good harvest in the coming months could ease prices a little, in the next 10 years, real prices for rice and wheat are likely to average as much as 20 per cent higher.