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Global food prices stabilise, calming food crisis fears

By Caroline Scott-Thomas , 10-Sep-2012

The global food price index held steady in August, calming fears of a repeat of the 2007-08 food crisis – but governments could still do more to stabilise markets, according to the Food and Agriculture Organization (FAO).

Presenting its latest Food Price Index at a press conference at FAO headquarters in Rome, director-general José Graziano da Silva said: “This is reassuring. Although we should remain vigilant, current prices do not justify talk of a world food crisis. But the international community can and should move to calm markets further.”

Graziano da Silva’s comments come just days after he and two other UN agency executives urged collaborative action to avoid another global food price crisis. The index spiked 6% in July after three consecutive months of declines.

However, while the overall index has stabilised, the latest forecast also confirmed a tightening of the global supply of key cereal crops, with poor weather having impacted harvests in several important growing regions. In reference to US maize and Russian wheat in particular, the organisation said that prices eased toward the end of the month, following heavy rains in those areas of the US hardest hit by drought and the announcement that the Russian Federation would not impose export restrictions.

FAO deputy director David Hallam said: “There’s a great deal of talk about whether we have some kind of food crisis emerging. There is no strong evidence to suggest that in the price data. …The current situation is one where there are grounds for concern, but certainly we are a long way from some kind of crisis.”

Hallam added that it was important to remember that the index is only one indicator among many, and the global stock to use ratio for grains is about 20% – “rather more comfortable than we saw in 2007-08”. Meanwhile, maize stock-to-use is at an historic low of 13%, and even lower in the United States.

“Given that the US accounts for more than 40 per cent of world exports of maize, that's a significant development,” he said.

The overall index stayed at 213 in August, well below the peak of 238 reached in February 2011, and was 18 points below the 231 level of August last year.

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