World food prices reach new historic peak

3.4% surge in January; FAO updates Food Price Index

ROME: World food prices surged to a new historic peak in January, for the seventh consecutive month, according to the updated FAO Food Price Index, a commodity basket that regularly tracks monthly changes in global food prices.

The Index averaged 231 points in January and was up 3.4 per cent from December 2010. This is the highest level (both in real and nominal terms) since FAO started measuring food prices in 1990. Prices of all monitored commodity groups registered strong gains in January, except for meat, which remained unchanged.

“The new figures clearly show that the upward pressure on world food prices is not abating,” said FAO Economist and Grains Expert Abdolreza Abbassian.

“These high prices are likely to persist in the months to come. High food prices are of major concern especially for low-income food deficit countries that may face problems in financing food imports and for poor households which spend a large share of their income on food.”

“The only encouraging factor so far stems from a number of countries, where – due to good harvests – domestic prices of some of the food staples remain low compared to world prices,” Abbassian added.

FAO emphasised that the Food Price Index has been revised, largely reflecting adjustments to its meat price index. The revision, which is retroactive, has produced new figures for all the indices but the overall trends measured since 1990 remain unchanged.

The FAO Cereal Price Index averaged 245 points in January, up 3 per cent from December and the highest since July 2008, but still 11 per cent below its peak in April 2008. The increase in January mostly reflected continuing increases in international prices of wheat and maize, amid tightening supplies, while rice prices fell slightly, as the timing coincides with the harvesting of main crops in major exporting countries.

The Oils/Fats Price Index rose by 5.6 per cent to 278 points, nearing the June 2008 record level, reflecting an increasingly tight supply and demand balance across the oilseeds complex.

The Dairy Price Index averaged 221 points in January, up 6.2 per cent from December, but still 17 per cent below its peak in November 2007. A firm global demand for dairy products, against the backdrop of a normal seasonal decline of production in the southern hemisphere, continued to underpin dairy prices.

The Sugar Price Index averaged 420 points in January, up 5.4 per cent from December. International sugar prices remain high, driven by tight global supplies.

By contrast, the FAO Meat Price Index was steady at around 166 points, as declining meat prices in Europe, caused by a fall in consumer confidence following a feed contamination scandal, was compensated for by a slight increase in export prices from Brazil and the United States.

Govt decides to accelerate National Food Production Programme

Government has decided to accelerate the food production drive targeting the one million home gardens set up under the Apiwawamu- Rata Nagamu Program. Government is to provide necessary seeds and other plants to the public, school children and others free of charge depending on their needs to cultivate home garden at every household.

The recent price escalation of commodities in the open market affecting the cost of living of the general public prompted the Cabinet of ministers to take some practical and meaningful actions to revive the food production at grass root level in the country.

Accelerating the cultivation activities of the one million homestead gardens under the “Api Wawamu - Rata Nagamu Programme”; and to provide plants and seeds  to school children to develop their home gardens are two  major activities identified to be immediately implemented under this food drive

The government’s program will consolidate the support of all public offices at central and regional level as a special committee for the purpose consisting of representatives of key ministries will be appointed.

A Committee representing the officials of the Ministries of Economic Development, Agriculture; Agrarian Services and Wildlife; Health, Public Administration and Home Affairs; Local Government and Provincial Councils; Mass Media and Information; Education; and Provincial  will meet weekly for action to be taken expeditiously.

PPP to boost seed production

THE Government is to aggressively promote Public-Private Partnerships (PPPs) to boost seed production in the country.

A decision to this effect was made at this week’s Cabinet meeting. Government sources said that on a proposal made by the Minister of Agriculture Mahinda Yapa Abeywardana, Cabinet approval was granted for the production of seed  varieties in Sri Lanka with both State and the private sector participation. Towards this end, facilities at the 19 State-owned farms will be obtained for production use.

Sources said 15,000 MT of seeds such as potatoes, maize, onions and beans were imported annually to Sri Lanka for cultivation purposes, costing over Rs. 1 billion in foreign exchange.

“It has been noticed that local farmers prefer to have local seed varieties due to their higher productivity and resistance to pests and diseases,” sources said.