(bn) world food prices climb to record

Bloomberg News, sent from my iPhone.

World Food Prices Rise to Record on Dairy, Grains, UN Says
March 3 (Bloomberg) -- World food prices climbed to a record in February on surging dairy, grain and meat costs, the United Nations said.

An index of 55 food commodities rose 2.2 percent to 236 points from 230.7 in January, the eighth straight gain, the UN's Food and Agriculture Organization said on its website today.

Rising food costs helped to fuel social unrest and riots in North Africa and the Middle East that toppled presidents in Tunisia and Egypt this year. Prices surged globally as a drought in Russia prompted the country to ban grain exports last year and adverse weather threatened crops in nations from wheat exporter Canada to soybean producer Brazil.

"Unexpected oil-price spikes could further exacerbate an already precarious situation in food markets," David Hallam, the Rome-based FAO's director of trade and markets, said in a statement. "This adds even more uncertainty concerning the price outlook."

Global food prices probably will rise in the first half of this century because of an expanding population and higher incomes, slower crop-yield growth and the effect of climate change, Ross Garnaut, the Australian government�s climate-change adviser, said yesterday.

More People
Food production will have to climb by 70 percent between 2010 and 2050 as the world population expands to 9 billion and rising incomes boost meat and dairy consumption, the FAO forecasts. Producing 1 kilogram (2.2 pounds) of pig meat can take 3.5 kilograms of feed, U.S. Department of Agriculture data shows.

The UN's food-price index rose from 176 points from a year earlier, with all five food groups advancing. The dairy index climbed to 230 points in February from 221.3 in January.

Milk futures traded in Chicago jumped 15 percent last month following a 26 percent surge in January, the biggest monthly gain since March 2004. Whole-milk power prices rose to a record in its biweekly auction, Fonterra Cooperative Group Ltd., the world's biggest dairy exporter, said March 1.

The FAO's sugar-price index slipped to 418 points from a record 420.2 points in the previous month. The UN agency's index is trade-weighted, with the sweetener accounting for 7 percent. Raw-sugar prices climbed 37 percent in New York in the past year.

Meat Prices
The gauge for meat, which makes up 35 percent of the overall index, rose to 169 points from 165.9 points. Meat is a "significant" part of the diet in developed countries, which may see more inflation from food than in 2007-08, according to Ken Ash, trade and agriculture director at the OECD.

A gauge of cooking oils and fats gained to 279 points from 277.7, the FAO said. Its cereal-price index climbed to 254 points from 244.8 in January, below the peak level of 274.3 in April 2008, the report showed.

Countries probably spent at least $1 trillion on food imports in 2010, with the poorest paying as much as 20 percent more than in 2009, the UN has said. Surging food and energy costs are stoking emerging-market inflation and have the power to topple governments, Nouriel Roubini, the New York University economist who predicted the financial crisis, said Jan. 26.

Food prices' effect on poor consumers is less severe than three years ago, when costs also surged, because rice rose less than other grains, according to the Organization for Economic Cooperation and Development. Rice is the staple food of more than half of the world population, according to the International Rice Research Institute.

Thai grade-B white rice, the Asian benchmark, dropped almost 3 percent from a year ago to $533 a ton this week, according to the Thai Rice Exporters Association. Rice from Thailand, the world's largest exporter of the grain, reached $1,038 a ton in May 2008.

To contact the reporter on this story: Rudy Ruitenberg in Paris at [email protected] .

To contact the editor responsible for this story: Claudia Carpenter at [email protected] .

Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/

Sent from my iPhone

LM