One Billion Are Hungry Warns UN FAO, Production Needs to Increase by 70% to 100%

An estimated one billion people will continue to go hungry unless action is taken to address price volatility and improve agricultural production. The warning has come from Jacques Diouf, the head of the United Nations Food and Agriculture Organization (FAO) .

Addressing the agency's executive body meeting in Rome, he said food production needs to be increased by between 70 and 100 per cent to meet the needs of a growing global population.

"We will continue to have the current unacceptable situation of around one billion hungry billion people with the ensuing consequences in terms of social unrest, political turmoil and grave risks for the peace and stability in the world, a situation where the world population is expanding from 6.9 billion to more than 9 billion in the year 2050."

The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities. It consists of the average of five commodity group price indices (representing 55 quotations), weighted with the average export shares of each of the groups for 2002-2004. In February, FAO revised the composition of the Meat Price Index. This resulted in adjustments to the historical values of the FFPI. For more information please visit this site.

Credit: UN

The FAO Food Price Index (FFPI) averaged 230 points in March  2011, down  2.9 percent from its peak in February, but still 37 percent above March last year. International prices of oils and sugar contracted the most, followed by cereals. By contrast, dairy and meat prices were up.

The FAO Cereal Price Index averaged 252 points, down 2.6 percent from February, but still 60% higher than in March 2010. The past month was extremely volatile for grains, with international quotations first plunging sharply, driven largely by recent events in Japan and North Africa, before regaining most of their losses towards the end of the month, as markets reacted to a continuing tight world supply and demand condition. Rice prices also fell amid large availability in exporting countries and sluggish import demand.

The FAO Oils/Fats Price Index fell 7 percent, to 260, interrupting nine months of consecutive rise. Last month’s slide in prices reflects primarily a recovery in global supply prospects for palm oil.

The FAO Sugar Price Index averaged 372 points, down as much as 10 percent from the highs of January and February. The recent decline in international sugar prices was partly prompted by prospects of increased market availability, notably from India.

The FAO Dairy Price Index averaged 234 points, up 1.9 percent from February and 37 percent above its level in March 2010. Firm import demand together with lower than expected production in Southern hemisphere supplying countries, where the milking season is coming to a close, continue to underpin world prices.

The FAO Meat Price Index  was little changed at 169 points in March. The upward trend in  meat prices since 2010 has flattened in the past few months, reflecting trade disruptions in several key markets, particularly North Africa and Japan.

Go to Global Food Price Monitor, for details on domestic food price developments

Beginning March 2011, FAO has launched an online monthly brief on the global cereal situation and outlook. The main objective is to provide an up-to-date perspective of the world cereal market. The brief is supplemented by a detailed assessment of cereal production as well as supply and demand conditions by country/region in the quarterly Crop Prospects and Food Situation (March, June, September, December). More in-depth analyses of world markets for cereals, as well as other major food commodities, are published biannually in Food Outlook (June and November)

Credit: UN

World production of cereals fell in 2010, while total cereal utilization is expected to reach a record in 2010/11, resulting in falling stocks. While increased cereal production  is expected  in 2011, this  may not be sufficient to replenish inventories, in which case prices could remain firm also in 2011/12.

Although the 2010/11 world trade forecast has been raised by 1.2mt to 274mt, it remains 2mt lower than in 2009/10.  Forecast trade in coarse grains is raised by 1mt, to 119mt, reflecting larger than anticipated imports by China, Egypt, and the EU, which more than offset downward revisions for Canada and the Republic of Korea.  Forecast trade in wheat is raised slightly, with imports by Islamic Republic of Iran, South Africa and Mexico raised.  forecast trade in rice in 2011 remains largely unchanged from February.

Following a 1 percent (25mt) decline in cereal production in 2010, some recovery is expected in 2011, supported by strong prices. Wheat production is tentatively put at 676mt, up 3.4 percent from 2010. This assumes yield recoveries and increases in plantings. Coarse grain and rice outputs are also anticipated to grow but, with the bulk of plantings beginning in the coming months, it is too early to make production forecasts.

The forecast for world cereal utilization in 2010/11 has been lowered slightly but is still up 2 percent from 2009/10 and a record. High international prices have had little impact on the overall world demand for food, feed or biofuels.

World cereal stocks for crop seasons ending in 2011 are forecast to shrink by 9 percent (47mt), bringing the stocks-to-use ratio down to a three-year low. Coarse grain inventories (maize in particular) are forecast to drop most, with major exporters’ stock-to-disappearance ratio plunging to a 30-year low of only 8 percent.

Summary Tables:

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1/ Production data refer to the calendar year of the first year shown. Rice production is expressed in milled terms.
2/ Production plus opening stocks.
3/ Trade data refer to exports based on a July/June marketing season for wheat and coarse grains and on a January/December marketing season for rice (second year shown).
4/ May not equal the difference between supply and utilization due to differences in individual country marketing years.
5/ Major grain exporters are Argentina, Australia, Canada, the EU, and the United States; major rice exporters are India, Pakistan, Thailand, the United States, and Viet Nam. Disappearance is defined as domestic utilization plus exports for any given season.

Source: United Nations