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Global recovery threatens food price surge

Conditions are ripe for a fresh surge in food prices as the global economy recovers, says the senior United Nations agriculture official.

Jacques Diouf, director-general of the UN’s Food and Agriculture Organisation (FAO), believes that the world is not doing enough to avert another food crisis. His warning comes as leaders are expected to gather in Rome on Monday for the World Food Summit .

“When the recovery picks up, we will be back to square one,” Mr Diouf told the Financial Times in an interview.

He said the same structural problems behind last year’s spike in food prices were still affecting the market. These included lack of investment, surging demand in Asia and diversion of food commodities into biofuels.

“We have all the elements of the crisis,” he said, adding that a weakening US dollar could exacerbate the upward price pressure in food commodities.

Although the prices of some commodities, such as wheat and rice, have halved since their peak in mid-2008 because farmers in rich countries have expanded their output, they remain well above the pre-crisis level and near record levels in poor countries.

Other food raw materials – particularly the so-called breakfast commodities such as cocoa, sugar and tea – are now trading at their highest level for about 30 years.

Mr Diouf’s warning came as global food companies urged policymakers to strive for regulatory transparency and a boost in infrastructure spending to tackle the food crisis.

via FT.com / Global Economy – Global recovery threatens food price surge.

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