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Worries About Rising Food Prices May Ease


Demand remains high for food commodities like maize

Demand remains high for food commodities like maize

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A United Nations report says world food prices stayed the same in August. Prices were unchanged after rising sharply in July.

A summer of drought in the United States and Russia has reduced expectations for corn and wheat supplies. As a result, a measure of food prices by the U.N. Food and Agriculture Organization rose six percent in July. But FAO economist Concepcion Calpe says the expected reductions did not get any worse in August.

CONCEPCION CALPE: "We're not in a bad situation, or as bad situation as we were last month because the prospects are not worsening further. And this is already good news."

Ms. Calpe says the FAO price index remains about ten percent below its highest level, reached in February twenty-eleven. But prices are still twice as high as they were ten years ago.

Demand remains high for food commodities like maize and wheat. The U.N. estimates that more cereal crops will be consumed this year than will be produced. That means markets will have to use some of the supplies that have been kept in reserve. Concepcion Calpe says those reserves have been low for several years.

CONCEPCION CALPE: "And therefore we are very much susceptible to very quick changes because there is very little buffer on which to rely to protect ourselves should there be another bad news on the production front."

She says there will be ups and downs in prices until production meets the level of demand. Still, many experts do not expect a repeat of the crisis of two thousand seven and two thousand eight. Prices jumped, playing a part in civil unrest in several countries.

For one thing, these experts point out that energy prices are lower now. That means producing and transporting food is not as costly. And Gary Ellerts at the United States Agency for International Development says this year's bad weather has not affected another important crop: rice. Mr. Eilerts is head of the agency's Famine Early Warning System.

GARY EILERTS: "Rice is very calm, very nice. Prices are not volatile. There's a large supply. And so, countries that depend on that, that were hurt a great deal in two thousand eight, are not being touched right now."

However, economist Lourdes Adriano at the Asian Development Bank says prices could increase if India stops exporting rice because of a drought.

LOURDES ADRIANO: "If we have a severe monsoon in India and it starts banning again the export of rice, then we will have a major problem. Because as you know, global rice trade is very thin. There are very, very few major exporters."

Prices jumped when India banned rice exports in two thousand eight during the food inflation crisis.

And that's the VOA Special English Agriculture Report. I'm Jim Tedder.

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Contributing: Steve Baragona and Ron Corben

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