Sunday 6 February 2011

Grain Price Increase coming, who will be hurt most?

ReaThere is no doubt grain price will increase next year, the question is how much to or by what percent? I am guessing, it will increase over 33% (1/3). Most of the developing nations are going to pay dearly, specially those that depend on aid like my Ethiopia will experience the crunch. In our region alone all of them are going to experience the effects of it. Uganda, Kenya, Sudan and Djibouti are going to experience the effects of this price increase just as badly, but not as much as we are.

GLOBAL: Food could cost more in 2011

Johannesburg, 17 November 2010 (IRIN) - If wheat and maize production do not rise substantially in 2011, global food security could be uncertain for the next two years, the UN Food and Agriculture Organization (FAO) has warned.

Photo: Akmal Dawi/IRIN
Wheat could become even more expensive next year

Wheat and maize prices have shot past their 2009 highs, with FAO adding that international food import bills could surpass one trillion US dollars in 2010. Food imports last topped the trillion dollar mark during the 2007/08 food price crisis.

The organization anticipates that world cereals stocks will shrink by seven percent, with barley declining 35 percent, maize by 12 percent and wheat by 10 percent.

Cereal stocks are not as low as they were in 2007/08, "but we are being slightly alarmist in our outlook to get production figures up next year," said Abdolreza Abbassian, secretary of the Intergovernmental Group on Grains at FAO. "Stocks of yellow maize, which is used largely for animal feed, are getting to the low level they were in 2007/2008."

Six percent more maize will have to be produced in 2011 than in 2010, while wheat stocks need to rise by more than 3.5 percent to ensure the world has enough reserves to tide it over 2011, said the FAO Food Outlook, released on 17 November.

“We not only need to replenish our stocks in 2011 but we need to do better than that to ensure we have stocks to last us in 2012,” said Abbassian. FAO calculations have not taken into account the possibility of unfavourable weather conditions next year.

"We are assuming we will have normal growing conditions, but if we have heavy rains or drought in some of the cereal-producing countries we could be in trouble, or if we have great growing conditions production could go up by more than expected levels," Abbassian said.

Global wheat and barley stocks declined in 2010 as severe drought and fires slashed production in Russia and Ukraine two of the world's largest producers. The news drove up wheat prices by 45 percent and even 80 percent in the second half of 2010, with an export ban imposed by Russia adding impetus. Canada, another major wheat producer, was also hit by bad weather.

World wheat inventories are forecast to fall to 181 million tonnes, 10 percent below the 2010 level but still 25 percent above the critically low level of 2008, the Outlook said. Read More

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