World food price situation set to remain tense in 2011: FAO

DELHI: Prices of agricultural commodities are expected to remain high and volatile into 2012, said the United Nations body Food and Agriculture Organisation ( FAO) on Tuesday.

The next few months will be critical in determining how the major crops will fare in 2011, noted the biannual report ‘Food Outlook’.

Although there is encouraging news from Russian Federation and Ukraine regarding wheat crop but weather conditions in Europe and North America could hamper maize and wheat yields.

"The general situation for agricultural crops and food commodities is tight with world prices at stubbornly high levels, posing a threat to many low-income food deficit countries," said David Hallam, Markets and Trade Division Director of FAO.

However, it pointed out that the record cereal production in 2011 is expected to meet consumption, providing little support to prices. The lifting of ban on cereal exports by Russia would also aid in relieving some pressure in the grain markets.

The global food import bill is expected to reach a new record of $ 1.29 trillion in 2011, according to FAO.

"Low-income food deficit countries and least developed countries would be hardest-hit since they would likely have to spend respectively 27 and 30 per cent more on food imports than last year," it said.

The report also noted that much was needed to be done to improve market transparency.