UN feed price warning

Feed prices are expected to ease from their recent record peaks, but will remain much higher than they have been over the last decade, according to a report from the UN Food and Agriculture Organisation (FAO).

The FAO's latest Agricultural Outlook, prepared in association with the Organisation for Economic Co-operation and Development (OECD), said that prices may also become more volatile over the next decade because stock levels remain low and demand for agricultural commodities will become less responsive to price changes.

The report says that drought in some of the world's main grain-producing regions was a large but transitory factor in the sharp increase in prices over the past two years. More permanent factors - including high oil prices, changing diets, urbanisation, economic growth and expanding populations - are expected to contribute towards sustained higher prices over the next 10 years.

Growing demand for biodiesel is another contributing factor to high crop prices, and the report predicts that this will continue, with biodiesel production set to expand from 11bn litres a year in 2007 to 24bn litres by 2017.

Both the FAO and the OECD have insisted that international emphasis should be on finding sustainable solutions by boosting agricultural production and productivity, rather than trade protectionism.

Speaking at the Outlook's launch in Paris, OECD secretary-general Angel Gurría said: "The way to address rising food prices is not through protectionism but to open up agricultural markets and to free up the productive capacity of farmers, who have proven repeatedly that they will respond to market incentives."

Food prices and their impact on the world economy will be one of the issues that will be addressed at the OECD Ministerial Council Meeting in Paris on 4-5 June 2008. At a separate summit at FAO headquarters in Rome - on 3-5 June - world leaders, including many heads of state and government from around the world, will discuss policies and strategies on how to improve and ensure world food security.

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