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Wednesday, 19 January 2011

EU seeks clarity over soaring food prices

Before rushing into finding solutions to halt a new hike in global food prices, leaders of the world's rich economies gathering for a G20 meeting at end of the month need to first ascertain what exactly is driving prices to soar, European Commission officials said on 13 January. Current fears regarding a repetition of the 2007-08 food price crisis are not completely justified, noted the EU executive.Anxiety about prices was sparked last week with the publication of the United Nations' latest food price index, which showed a 32% rise in wholesale prices of agricultural commodities in the second half of 2010.But EU officials underlined that the UN Food and Agriculture Organisation index results are "not true generally," as the index only looks at the export share of developing countries for each commodity.As the Group of 20 leading economies prepares to discuss ways to tackle soaring food prices at its Paris meeting on 27-28 January, Commission officials stressed that before trying to find a solution, leaders would need to define the problem in order to get off on the right track: what is driving up prices?Much has been said and reported about the effect on prices of soaring demand from emerging economies, decreasing yields due to unpredictable weather patterns, and the impacts of biofuel production or energy prices, for example.According to officials, however, the biggest problem is the link between agricultural markets and other commodity markets that have nothing to do with agriculture. While in the past assumptions regarding food price trends were based on agricultural trade patterns, "now prices are affected by completely different things," they said.In particular, the financial markets are dragging prices up and down irrespective of agricultural realities, one noted.The EU officials' comments on food prices were made off the record to journalists attending a briefing on new market forecasts for agricultural production and consumption in the European Union between 2010 and 2020.

Source: EurActiv