Food prices may ease in 2012 but won't drop: FAO

Tue Jan 3, 2012 12:16pm EST
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By Catherine Hornby

ROME (Reuters) - Prices of some foods may ease slightly in 2012 due to a slowing global economy but are unlikely to drop drastically from the high levels reached last year, the new director-general of the U.N.'s Food and Agriculture Organization said Tuesday.

Jose Graziano da Silva, the Brazilian who replaced Senegal's Jacques Diouf at the helm of the FAO at the start of 2012, said volatility in food markets was likely to continue and that more people would be at risk of hunger due to economic instability.

"Prices will not be going up as in the last two to three years but will also not drop down. There may be some reductions but not so drastic, in the short term," Graziano da Silva told a news conference in Rome.

"Volatility will remain, that is clear," he said.

Global food prices measured by the FAO hit a peak last February but have been falling since June as crops have improved and concerns about global economic turmoil have reined in demand growth.

High food prices have helped fuel inflation and contributed to the civil unrest which created the so-called Arab Spring last year.

Graziano da Silva said he did not expect the economic slowdown in Europe to impact funding for FAO projects, because the amount countries donated was such a small proportion of gross domestic product that they were unlikely to cut it.

But he said the slowdown was likely to increase the number of people at risk of hunger in the world, which the organization estimated at 925 million people in 2010.   Continued...