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OECD issues warning on food costs

China Daily | Updated: 2008-05-30 07:47

Wheat and corn prices may be 25 percent higher in a decade's time than was predicted last year as demand for food and biofuels soars, the Organization for Economic Cooperation and Development said.

Wheat is likely to cost $231.60 a ton in 2016-2017 and coarse grains, notably corn, may be at $166.60 a ton, the OECD said in a report produced with the Food and Agriculture Organization of the United Nations. The organizations predicted prices of $183.20 and $138.20 in their report a year ago.

"Changing diets, urbanization, economic growth and expanding populations are driving food and feed demand in developing countries" the organizations said in the report, released yesterday. "While smaller than the increase in food and feed use, biofuel demand is the largest source of new demand in decades."

Wheat, corn, rice and soybeans have climbed to records this year on shrinking global stockpiles and rising demand.

Record crude-oil prices are bolstering demand for alternative fuels, such as ethanol derived from corn or sugar cane. Total use of grains to make ethanol will jump 40 percent to about 98 million tons, 94 percent of it from corn, the FAO said.

Food costs won't return to the average level seen over the past decade even though output will expand in response to higher prices, the OECD and FAO said.

Agencies

(China Daily 05/30/2008 page16)

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