Food prices may remain volatile next year: FAO

Decline in planting of cereals across the world may lead to volatile food prices next year, the Food and Agricultural Organisation (FAO) of United Nations has said in its latest report.

In the European Union and the Commonwealth of Independent States, barley is foreseen to be most affected while winter wheat plantings in the United States may also be negatively influenced by the low price prospects, the report said.

In India, however, the government has already raised concerns over food inflation, which hit 19.05 per cent for the week ended November 28 compared with 17.47 per cent the previous week.

World wheat production is forecast to fall to 678.6 million tonnes (MT) in 2009, slightly below last year's record of 681.4 MT. Rice output may decline to 450.8 MT compared with 459.6 MT in the previous year.

The production of major oilseeds, in contrast, is expected to rise by a staggering 8.1 per cent to 428.4 MT from 396.4 MT last year. FAO estimates the milk production in the world to reach 701 MT, up one per cent from the previous year.

World cereal stocks, today, are at comfortable levels from two years ago, with the stock-to-use ratio at almost 23 per cent (4 percentage points more than last year).

Amid speculations that various countries may not allow prices to move in tandem with the demand-supply mismatch, farmers diverted much of their land holding to comparatively remunerative crops such as cotton, sugarcane and oilseeds. In India, the kharif output of foodgrain was largely affected by unfavourable climate.