United Nations experts are describing volatile food prices as a major threat to food security. At a special meeting of the U.N. Food and Agriculture Organization in Rome Friday, they concluded that a repeat of the 2007-2008 food price crisis is not imminent, but new measures are needed to control fluctuations in grain markets.
Russia's exceptional drought and the country's ban on wheat exports have pushed up wheat prices to two-year highs. The increases have brought back bad memories of price spikes in 2007 and 2008, which triggered food riots in several countries around the world. But FAO Director-General Jacques Diouf says conditions are much different today. "The global production forecast for cereals in 2010 is still the third highest on record, and the world cereal stocks-to-use ratio is well above the 30-year low registered in 2007-2008," he said.
FAO officials say energy prices and economic growth also are much lower than in 2008. As a result, they agreed that a repeat of the earlier crisis is unlikely.
In addition to Russia's export ban, the delegates identified speculation by financial investors and a lack of information in some countries about global supply and demand as factors driving price volatility.
However, FAO grains chief Abdolreza Abbassian says they also agreed the danger is not over. "This issue of volatility in prices, it is not something that is now going to go away. This year [it] may be Russia. Next year [it] may be another country, or another factor," he said.
The experts said price volatility is a major threat to food security, and they recommended more work to deal with its causes.
Sophia Murphy is a senior advisor with the Institute for Agriculture and Trade Policy. She says now that countries have agreed on these key points, what they do next will be the hard part. "A lot of what needs to be done is quite controversial. It involves getting into regulating commodity exchanges. It involves a lot of developing countries thinking again about a more public role in managing food stocks and grain reserves. So I think they find it difficult to come to agreement on what to do, even though everyone agrees they have to do something," she said.
She says financial reforms the United States passed this summer are a step in the right direction, but more countries will need to make changes as well.
And agriculture experts disagree on how to manage grain reserves to protect against price spikes.
The issues are expected to come up again at an FAO food security meeting next month. And some food experts say the G-20 group of top economies should work on formulating a global response to what is fundamentally a global issue.