Global food market far improved from crisis years

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The United Nations Food and Agricultural Organization headquarters in Rome is an oasis of calm, for a change.

Food prices, though relatively high, are well off their peak, and production is rising. No one is talking about convening an emergency food summit.

There are pockets of distress around the planet and FAO says 870 milllion people suffer from chronic undernourishment.

But, over all, the global food market cannot be compared to the crisis years of 2008 and 2011, when record high prices threatened mass starvation, triggered food riots and probably helped get the Arab Spring rolling.

Earlier this month, the FAO forecast a 5.4-per-cent rise global wheat production, to 695-million tonnes, over last year's harvest.

That's only 6 million tonnes short of the all-time best harvest, in 2011.

Production of coarse grains such as maize (corn) and barley is expected to rise by 9.3 per cent, to a new record.

In the United States, the world's largest maize producer, maize plantings are expected to reach their highest level since 1936.

The next forecast, to be published in June, is not likely to be substantially different, FAO officials say.

Prices, meanwhile, show little danger of soaring, at least in the near term.

At last count, in April, the FAO's food index (a basket that monitors cereals, oils, dairy, meat and sugar) was 9 per cent below its peak, reached in February, 2011. The previous record was in 2008, after prices climbed 80 per cent in two years and panic broke out in some of the poorest countries as supplies went short.

The high food production can in part be explained by simple economics.

While below their peak, prices are still high enough to encourage farmers to boost plantings. Recovery from drought in some major breadbasket areas, notably Russia and the United States, has helped to increase output. At the same time, the slowdown in global growth is taking the edge off demand. The wealthier people are, the more protein they consume.

The pleasing lack of financial "speculators," as the FAO calls them, is helping to moderate prices.

Two or three years ago, funds were pouring money into food commodities, driving up the price and earning the wrath of the governments in poor countries, which blamed the funds for making food unaffordable. With food prices well off their peak and possibly on their way down from here, it appears the funds have lost interest.

To be sure, not all is well in the food markets.

Egypt, the world's biggest buyer of imported wheat, may be on the verge of wheat shortages, thanks to burgeoning population growth and shortages of fuel and fertilizer, Bloomberg reported earlier this month. In the Sahel, in northern Africa, 20 million people are experiencing "serious" food shortages, the International Federation of Red Cross and Red Crescent Societies said last month.

Still, the situation is a big improvement over the 2008 and 2011 crisis years. But there if there is one thing the FAO has learned, it is to never make long-term predictions. In agriculture, pleasingly balanced food markets tend not to last long