The prices of the main commodities are even higher now than they were during the 2007-2008 crisis, posing a challenge for net food importing countries.
San Jose, Costa Rica, February 3, 2011 (IICA). In a report to the Ministers of Agriculture of the Americas on the rising prices of major commodities, Victor M. Villalobos, Director General of the Inter-American Institute for Cooperation on Agriculture (IICA), said “Those countries of Latin America and the Caribbean that are net food-importing countries must redouble their efforts to raise productivity and lessen the effects of climate change.”
At present, world markets are nervous, grain prices are volatile and there are growing concerns about the possible social implications of this situation, and analysts are divided as to whether this is a new, separate development or the resurgence of the 2007-2008 crisis.
The most serious challenge is facing those countries that are net importers of those products that becoming more expensive, including tropical products such as coffee, cacao and sugar and dairy and meat products, which were not affected in the 2007-2008 crisis, and especially for those segments of the population with the lowest incomes.
In response to this situation, IICA has stressed the need to increase the levels of investment in technology and innovation in agriculture, with a view to improving yields and thereby increasing global food supplies to meet the global demand for food, which is set to double by around 2050. It also points to the need to address growing climatic variability, which is contributing to price volatility, and to take actions to adapt to the effects of climate change.
Villalobos added “Other actions call for a coordinated effort at the regional level, such as initiatives designed to improve the availability of and access to timely information; coordinate reserves of products, especially grains; and enhance the operation and transparency of markets.”
In August 2010, IICA published a report in which it highlighted the instability in world wheat markets due to the problems in Russia. During the first weeks of 2011, there have been reports of bigger and more generalized increases than in 2007-2008 which are accelerating the food inflation rate, having an impact on governance in African and Asian countries and reigniting concerns about food security.
Forecasts from the United Nations Food and Agriculture Organization (FAO) suggest that prices will continue to rise, while the World Bank predicts a less severe situation because global supplies of wheat, corn and rice are bigger than in 2007-2008.
There are certain differences with respect to the 2007-2008 crisis, such the existence of greater stocks of major commodities and the fact that, to date, the price of rice has not risen.
However, other structural and short-term factors, such as the growth of the global demand for food, higher oil prices, concentration of the production and export of the main agricultural commodities, climatic instability, restrictive trade policies, and price speculation, have the potential to lead to a food crisis and need to be address immediately.
For more information, contact
rafael.trejos@iica.int
