The European Central Bank added its voice Thursday to those calling attention to rising food prices, warning that it was not sure greater supply would be able to limit future increases. In 2010, wheat prices soared 91 percent owing to "supply disruptions and adverse weather conditions, along with protectionist threats," the ECB said in its monthly bulletin for January.
Maize prices were 57 percent higher at the end of last year, soybeans jumped 33 percent and sugar 32 percent, it added. Price pressures would remain strong owing to growing demand for commodities both for food and as a key component in biofuels, the ECB said. Although the capacity to produce more food could also increase, "there remains significant uncertainty about the extent and pace of the ability of supply to meet the expected rise in demand and thereby help to limit the rise in food prices," it warned. The world has became complacent about global food concerns owing to stable prices during the past 30 years, it said.
This has lead to a reduction in funding for research and development that accounted for 70 percent of the production increase in developing countries and nearly all of the increases in advanced economies over that period. Now, the world is seeing demand soar as income levels rise in emerging economies and dietary changes shift towards a greater focus on meat, dairy products and fish, the ECB said.
Although "sufficient arable land remains available," higher prices could now stimulate both publicly and privately funded research to increase yields further, it added. Rising food costs have raised fears of a repeat of riots that erupted in 2008. In his latest book "World on the Edge," environmentalist Lester Brown of the Earth Policy Institute warned: "We're one poor harvest away from chaos."
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