Politics, Business & Culture in the Americas

Latin America and Caribbean to Continue Facing Uncertainty in Food Prices

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According to a joint bulletin released yesterday by three social development agencies, food price volatility has increased in recent months and will remain high for the time being. The document, “Price volatility in agricultural markets (2000-2010): Implications for Latin America and policy options,” produced by the Economic Commission for Latin America and the Caribbean (ECLAC), the UN Food and Agriculture Organization (FAO) and the Inter-American Institute for Cooperation on Agriculture (IICA), describes a current scenario in Latin America of wild and unpredictable changes in the prices of agricultural raw materials.

The report says price volatility will have varying effects, depending on country’s individual circumstances. For example, in countries that export food raw materials, price rises offer an opportunity to improve terms of trade, while the change may represent a significant threat to food security for net food importers. Other possible consequences include losses in economic efficiency and an increase in under-nutrition.

The FAO also recently released figures showing that global food prices have hit record highs, rising 2.2 percent in February from the previous month. Prices for global cereals such as wheat and corn have risen drastically (60 and 93 percent, respectively) over the past year due to a succession of weather problems that diminished harvest prospects. While the Organization for Economic Cooperation and Development says the relatively smaller increase in rice prices (3.4 percent) is helping to stave off a crisis on the scale of what occurred in 2008, the secretary of FAO’s Intergovernmental Group on Grains, Abdolreza Abbassian, says spikes in oil prices resulting from unrest in Libya and the Middle East could make an “already precarious” food situation much worse, possibly leading to a food crisis in 2011-2012.

While the three agencies acknowledge there are no universal solutions to the current situation, they emphasize increasing food production, mainly by supporting small-scale farmers. They also recommend investing more in the agricultural sector in the long term and creating more efficient marketing and delivery channels for fresh food.

Tags: Food and agriculture
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