Grain drain

After the price hike and panic two years ago when grain prices reached record levels, recent harvests have generally been good and prices have stabilised. But a new report by the UN's Food and Agriculture Organisation (FAO) and the Organisation for Economic Cooperation and Development (OECD) suggests that many challenges lie ahead. Food prices are likely to rise by as much as 40 per cent over the next 10 years amid growing demand from emerging markets and for biofuel production, the new report suggests. The report predicts that there will be a production boom in emerging markets such as Brazil and China that will help supply keep up with demand, but campaigners are worried that the supply will not reach those in increasing need. There's a concern that the prospect of rising prices will lead to investors and sovereign wealth funds buying land and threatening traditional local producers. While the report expects grain prices to be 15–40 per cent higher, it believes vegetable oils will be more than 40 per cent higher and dairy produce prices up by 16–45 per cent. Surprisingly, the report concludes that the cost of livestock is likely to be less marked on the whole, in spite of the world demand for meat increasing faster than other farm produce, as people in some developing markets change their dietary habits. " Sustained economic growth in emerging markets is an important factor underpinning growing demand and higher prices. Continued expansion of biofuel output — often to meet government targets — will also create additional demand for wheat, coarse grains, vegetable oils and sugar. Increasingly, higher production costs add upward pressure on prices, particularly where energy is used intensively. " The report sees global agricultural output growing more slowly over the next decade than in the past 10 years but nevertheless remains on track with previous estimates to meet the 70 per cent increase in world food production required to meet the market demand of estimated population levels in 2050. Brazil is by A new report suggests food costs are set to soar. Nigel Williams reports. Demand: The market for grain is expected to rise sharply, according to a new report. (Photo: Radius Images/Alamy.)