MercoPress. South Atlantic News Agency

Most vulnerable populations hit by soaring cereal prices

Soaring international cereal prices and freight rates are projected to increase import bills for the world's poorest countries 35% for the second year running affecting the most vulnerable populations, points out FAO in its latest Crop Prospects and Food Situation report.

FAO says early prospects point to the possibility of a significant increase in world cereal production in 2008, but international prices of most cereals remain at record high levels and some are still on the increase. The forecast increase in production follows expansion of winter grain plantings and good weather among major producers in Europe and in the United States, coupled with a generally satisfactory outlook elsewhere. However dwindling stocks, continuing strong demand for cereals is keeping upward pressure on international prices, despite a record world harvest last season, the report said. International wheat prices in January 2008 were 83% higher than a year earlier. Even with high prices for cereals, total world trade in cereals is expected to peak in 2007/08, driven in great part by a sharp rise in demand for coarse grains, especially for feed use in the European Union, according the report. Cereal imports for all Low-Income Food-Deficit countries in 2007/08 are forecast to decline by about 2% in volume, but as a result of soaring international cereal prices and freight rates their cereal import bill is projected to rise by 35% for the second consecutive year. An even higher increase is anticipated for Africa, 45%. It is estimated poor countries will pay a record 33.1 billion US dollars for cereal imports in the year to July 2008. Cereal import bills forecast are as follows: Africa, 45%; Asia, 25%; Latinamerica 31%, Oceania, 25% and Europe 53%. In order to limit the impact of rising cereal prices on domestic food consumption, governments from both cereal importing and exporting countries have taken a range of policy measures, including lowering import tariffs, raising food subsidies, and banning or imposing duties on basic food exports. FAO report says that in North Africa, early prospects for the 2008 winter cereal crops are mixed, but in Southern Africa the overall outlook is satisfactory, despite severe localized floods. In several countries of Eastern Africa, another bumper cereal crop was gathered in 2007, but poor secondary crops are expected in Kenya and Somalia, according to the report. In Asia, early indications point to a 2008 aggregate wheat crop around last year's record level. Overall prospects for the 2008 maize crop are satisfactory in South America, although the outlook remains uncertain in Argentina. Heavy rains have caused severe flooding in Mozambique, Zimbabwe, Zambia and Malawi. Farmers in affected areas are in urgent need of seeds and other inputs for replanting during what is left of the main cropping season, which runs from October to April, and to prepare for the next planting season. In Bolivia, severe floods have adversely affected over 42 000 families, who are in need of emergency humanitarian assistance, with numbers on the increase. Large cropped areas have been partially or totally lost. Exceptionally low temperatures in several central Asian countries, in particular China, Mongolia, Afghanistan and Tajikistan, have caused human casualties and resulted in crop and livestock losses. Worldwide, 36 countries are currently facing food crises, according to the report.