Whether for profit or social motives - and often both - an increasing number of investors are targeting opportunities in African agriculture. At the same time innovative approaches for deploying aid to support farming businesses linked to smallholders are emerging. This blog provides a snapshot of who is doing what, where and how.

18 November 2010

FAO warns against looming food crisis

Hinting a possible food crisis next year, UN Food and Agriculture Organization (FAO) said only a substantial increase in global wheat and maize output could help prevent it.

In its latest Food Outlook report, the FAO said if wheat and maize production do not rise substantially in 2011, global food security could be uncertain for the next two years. International food import bills could exceed $1 trillion in 2010, it added.

The FAO predicts that food import bills for the world's poorest countries will rise 11 percent in 2010, while bills for low-income food-deficit countries will go up by 20 percent.

"With the pressure on world prices of most commodities not abating, the international community must remain vigilant against further supply shocks in 2011 and be prepared," the FAO report said.

Wheat and maize prices have shot past their 2009 highs, with FAO adding that international food import bills could surpass one trillion US dollars in 2010. Food imports last topped the trillion dollar mark during the 2007/08 food price crisis.

The organization anticipates that world cereals stocks will shrink by seven percent, with barley declining 35 percent, maize by 12 percent and wheat by 10 percent.

Six percent more maize will have to be produced in 2011 than in 2010, while wheat stocks need to rise by more than 3.5 percent to ensure the world has enough reserves to tide it over 2011, said the FAO Food Outlook, released on 17 November.

Global wheat and barley stocks declined in 2010 as severe drought and fires slashed production in Russia and Ukraine two of the world's largest producers.

The news drove up wheat prices by 45 percent and even 80 percent in the second half of 2010, with an export ban imposed by Russia adding impetus. Canada, another major wheat producer, was also hit by bad weather.

World wheat inventories are forecast to fall to 181 million tones, 10 percent below the 2010 level but still 25 percent above the critically low level of 2008, the Outlook said.

Maize stocks are already low as production slipped in the United States, the world's largest producer, while demand continued to grow.