Monday, September 22, 2008

World Food Balance Unclear For Next Decade-France

ANNECY, France, (Reuters) - World farming will face uncertainty for at least 10 years over how far supply and demand can be balanced, implying little short-term relief from price volatility, the EU's leading agricultural producer France says.

In a working paper authored by France and being discussed by EU agriculture ministers at an informal meeting until Sept. 23, Paris says uncertainty about how much food to produce to meet demand will be the main issue to shape farm policy.

"An increase in agricultural productivity, in conjunction with the emergence of second-generation biofuels which compete less with food production, should reduce the tension on certain commodities markets," the paper says.

"However, at least for the next decade, agriculture will probably have to face uncertainty about the final balance between supply and demand," it says.
Farming experts say recent price rises in key food commodities such as cereals, rice, livestock and dairy products can be attributed to a global range of diverse factors, both temporary and structural.

They include unpredictable weather in key producer countries, structural changes in demand, high oil prices, development of biofuels and changes in consumer eating habits in countries like China, Brazil and India.

A broad consensus had emerged that there would be greater price instability due to wider opening of markets, more public health crises and climate change, which would increase the scale and frequency of unforeseen natural events, the paper said.

Agricultural policy strategies in major producer countries like Brazil and the United States would be key for price development, as would those in major consuming areas like China and India in terms of how demand might develop, it said.

"The decisions made by these major partners are likely to affect world prices in the medium to long term," the paper said.

"Some of them have already chosen options which have considerable consequences, such as the United States with its new Farm Bill or Brazil with its biofuels policy." (Reporting by Jeremy Smith; Editing by David Cowell)

Source: Reuters - Forbes.Com

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