December 4, 2007

Grain prices may rise by 10-20 percent by 2015

Grain prices may increase by 10 percent-20 percent in US dollar terms by 2015, said a report on Tuesday (December 4, 2007) by the Washington D.C.-based International Food Policy Research Institute.

Continued depreciation of the US dollar may further increase prices in US-dollar terms, the report said.

Changes on the supply side, including droughts and the diversion of food to produce biofuels, are powerful forces affecting the price surge at a time when demand is strong due to high income growth in developing countries, it said.

As a result of the surge in prices, "many of those who are the poorest and hungriest today will still be poor and hungry in 2015, the target year of the United Nation's Millennium Development Goals."

The institute also did a detailed study of effect of biofuel demand on specific farm products and found that if countries continue to implement their existing biofuel production plans and some new countries begin biofuel production, corn prices could increase by 26.3 percent by 2020, oilseeds by 18.1 percent and sugar by 11.5 percent.

Recent research on the impact of climate change on world food production showed that world agricultural gross domestic product may decrease up to 16 percent by 2020 as a result of global warming, though the impact will be uneven across nations, it said.

As a group, farm output of developing countries will likely fall 20 percent by 2020, while output in industrialized nations may fall by 6 percent, it said.