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Economy Sep 13, 2012

No cause for panic over food prices: UN

Istanbul: The head of the UN Food and Agriculture Organisation (FAO) said on Thursday there was no need for panic over global food prices, with the US corn crop not as weak as feared and maize and soybean exporters just beginning planting.

FAO Director-General Jose Graziano da Silva told a conference in Istanbul he did not see a need to convene an emergency G20 forum on food prices for now.

"But this is a decision that needs to be considered from week to week. At the moment the prices are very volatile and we are following them very closely," he said.

Da Silva noted major maize and soybean exporting nations in the southern hemisphere were just beginning their planting season, meaning production was set to increase.

"This game is long run. We've just started the second part of the game," he said.

Fears of a repeat of the unrest and hunger seen in the 2007/08 food crisis emerged as the worst U.S. drought in more than half a century, and persistent dryness in other key grain-producing countries, sent corn and soybean prices to successive record highs.

But the U.S. Department of Agriculture on Wednesday cut its forecast for the country's corn crop by less than one percent, indicating the drought may have done less damage than anticipated.

The forecast raised hopes a full-blown food emergency could be averted.

"Yesterday we had a very good message from the U.S., revising their numbers. Now the corn (price) is down," da Silva said.

AFP

US corn prices were trading at around $7.71 a bushel on Thursday, down close to 10 percent from a record high of $8.49 a bushel set on August 10.

The 2007/2008 crisis added 75 million to the number of chronically hungry people in the world, according to FAO estimates. Other bodies put the increase at up to 160 million.

Several members of the Group of 20 nations (G20) had said they were considering calling a meeting of its Rapid Response Forum, set up last year to respond to abnormal market conditions.

France, which presides over the G20 agriculture body AMIS, had previously said any decision on convening the forum would be made after the September 12 USDA report on grains.

Da Silva said he would meet France's agriculture minister on Monday to discuss the role of speculators in surging food prices, which has been a major French concern. He noted there was much better policy co-ordination globally to ward off a crisis than in the past.

"What happened in 2008 (was that) we didn't have any mechanism to co-ordinate policy. Now we do ... we have ministers, we have AMIS, we have protocols," he said.

"Most of the talks are informal but we are providing updated information and transparency to the markets, to avoid panic and any unilateral action."

Reuters

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