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Era of Falling Food Prices Seen at End on Population Growth
Diego Giudice/Bloomberg
Farmer Alfredo Pavon checks his field during a break in planting soybeans over wheat stubble in an attempt to capture the humidity remaining after a short rain in Ines Indart, Argentina.
Farmer Alfredo Pavon checks his field during a break in planting soybeans over wheat stubble in an attempt to capture the humidity remaining after a short rain in Ines Indart, Argentina. Photographer: Diego Giudice/Bloomberg
Feb. 6 (Bloomberg) — Jane King summarizes the top stories this morning on the Bloomberg Business Report. (Source: Bloomberg)
Feb. 6 (Bloomberg) — Gregory Smith, founder of Australian investment company Global Commodities Ltd., talks about the outlook for crude oil, corn, sugar, and soybeans.
He speaks from Singapore with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)
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Cattle Climb to Record
Daniel Acker/Bloomberg
Beef cattle stand in a barn at a feedlot owned by Jamie Willrett in Malta, Illinois.
Beef cattle stand in a barn at a feedlot owned by Jamie Willrett in Malta, Illinois. Photographer: Daniel Acker/Bloomberg
The era of falling food prices has
come to an end with the world population set to add another 2
billion people, according to Cargill Inc., the U.S. farm
commodities trader.
The United Nations’ Food and Agriculture Organization has
said global food output must rise 70 percent by 2050 to feed a
world population expected to grow to 9 billion from 7 billion
now and as increasingly wealthy consumers in developing
economies eat more meat. Food prices tracked by the FAO climbed
to the highest ever a year ago on surging grain prices.
“You don’t have to be a reviving bull on commodities to
believe that the era, which went from the 50’s, 60’s to 70’s and
early 80s, of ever decreasing food prices in real terms has
probably come to an end,” Paul Conway, vice chairman of
Cargill, said at the Kingsman sugar conference in Dubai
yesterday. The conference is continuing through tomorrow when
Jacob Robbins, managing director of global sweeteners at The
Coca-Cola Co., are among the scheduled speakers.
The FAO food-price index averaged 228 points last year, 23
percent more than in 2010 and above the 200 points recorded in
2008, when food riots erupted from Haiti to Egypt. Prices since
then have declined 11 percent by December.
Cargill, based in Minnesota, trades all kinds of farm
commodities, including cocoa, soybeans, corn, sugar, meat, wheat
and ethanol. Conway is based in Cobham, England. Wheat has
doubled since the end of 2005, raw sugar is twice the price in
December 2008 and orange juice climbed to a record last month.
Group of 20 farm ministers agreed to a plan last year in
June to set limits on export bans and create a crop database
to tackle what French President Nicolas Sarkozy called the
“plague” of rising food prices.
Hungry People
As many as 925 million people already faced hunger
worldwide in 2010, based on the FAO’s estimates. In response to
the 2008 food price crisis, countries from India and Egypt to
Vietnam and Indonesia banned exports of rice, a staple for half
the world. Russia in 2010 banned cereal exports after the
country’s worst drought in at least half a century destroyed
crops and cut production, sparking a surge in grain prices
across the world. Ukraine also restricted exports.
The desire to produce all the food needed locally is
“complete nonsense,” Conway said. Export bans in 2008 were a
consequence of the desire for self-sufficiency, he said. “That
disrupted international trade and we believe exacerbated food
price rises in that year,” he said.
The FAO’s index of 55 food items fell 2.4 percent to 210.99
points in December from 216.1 in November. The gauge slipped 4.1
percent in October, the biggest drop since March 2010, after
rising to a record 237.9 in February. The January index is set
for release on Feb. 9.
“The world’s farmers, some of the smartest businessmen
that there are, can produce enough food to feed the next two
billion people,” Conway said. “We are very confident about
that. However, they need help.”
To contact the reporter on this story:
Isis Almeida in London at
ialmeida3@bloomberg.net
To contact the editor responsible for this story:
Claudia Carpenter at
ccarpenter2@bloomberg.net
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