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Economy Title: IMF: Consumers Should Get Used to Higher Food Prices Read more: IMF: Consumers Should Get Used to Higher Food Prices Consumers should get used to paying more for food, after prices rose to a record, because farmers will take years to expand production enough to meet demand and drive down costs, the International Monetary Fund said. People in developing countries are becoming richer and eating more meat and dairy, meaning more grain for livestock feed and land for grazing animals, Thomas Helbling, an adviser for the IMF’s research department, and economist Shaun Roache wrote in an article. Rising demand for biofuels and bad weather also tightened supply, they said. “Rising food prices may be here to stay,” Helbling and Roache wrote in the article published in the agency’s Finance & Development magazine. “The main reasons for rising demand for food reflect structural changes in the global economy that will not be reversed.” The world food price index tracked by the United Nations rose to a record in February. Food inflation fueled political unrest across North Africa and the Middle East that toppled leaders in Tunisia and Egypt, the largest wheat importer. “Over time, supply growth can be expected to respond to higher prices, as it has in previous decades, easing pressure on food markets, but this will take time counted in years, rather than months,” the IMF’s Helbling and Roache said. Pig Meat Food output will have to climb by 70 percent by 2050 as the world population swells to 9 billion and rising wealth boosts meat and dairy consumption, the UN’s Food and Agriculture Organization says. Producing 1 kilogram (2.2 pounds) of pig meat can take 3.5 kilograms of feed, U.S. Department of Agriculture data show. The surge in oil and other commodity prices probably won’t cause a permanent increase in broader inflation, U.S. Federal Reserve Chairman Ben S. Bernanke said in testimony to the Senate Banking Committee on March 1. Crude oil traded in New York rose 28 percent in the past 12 months. Corn futures in Chicago surged 93 percent in the past year as rising demand for livestock and ethanol in the U.S. pushes the global stocks-to-use ratio to the lowest in 37 years. Wheat jumped 65 percent in the past year after drought last year in Russia and Eastern Europe prompted countries to restrict exports. Dry weather curbed corn output in the U.S., and floods in Asia restricted rice supplies, the IMF said. Rebuild Inventories “There’s a risk that the current price spike could persist for longer than the 2007-2008 experience,” said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia in Sydney. “There are more commodities involved in this current spike and that means it’s going to take longer to rebuild the inventories.” Global inventories for all grains will drop 13 percent before the next harvest, the USDA estimates. That’s the first decline since 2007. Surging food prices the following year sparked more than 60 riots from Haiti to Egypt. Increasing demand is causing isolated food shortages and accelerating inflation in developing countries even as it boosts farmers’ incomes and shifts planting strategies. Rice has lagged behind gains in other grains, and may be the commodity “separating us from a food crisis,” said Abdolreza Abbassian, a senior economist at the FAO. Prices may climb as consumers seek cheaper alternatives to wheat and if drought spreads to China’s growing regions, according to the International Rice Research Institute. Asian Benchmark Thai grade-B white rice, the Asian benchmark, has fallen almost 3 percent from a year ago to $533 a ton this week, according to the Thai Rice Exporters Association. The price of rice from Thailand, the world’s largest exporter of the grain, reached $1,038 a ton in May 2008. Global farm prices including wheat, soybeans and sugar may drop from next year as their advance prompts farmers to boost planting, potentially cutting record food costs, the Australian Bureau of Agricultural & Resource Economics & Sciences, a government forecaster, said in a report March 1. The surge in food prices in 2008 was cut short after the global financial crisis pushed the world economy into recession and slowed demand, Mathews said. It will take the same “type of economic calamity” to curb demand for food enough to allow farmers to keep pace with production, he said. Three-quarters of the global growth in demand for major crops in the past decade has been in emerging markets, according to the IMF article. High food costs still have the biggest impact on developing countries, where consumers spend a greater percentage of their incomes on food, the IMF said. Good Harvests It will take at least two years of good harvests to rebuild food stockpiles that were drained after drought and excessive rains damaged crops in some of the world’s biggest exporting nations, Dominic Schnider, director for wealth management research at UBS, said March 2. Policy makers “will likely have to continue confronting the challenges posed by food prices that are both higher and more volatile than the world has been used to,” Helbling and Roache wrote. Read more: IMF: Consumers Should Get Used to Higher Food Prices
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#1. To: AKA Stone (#0)
Fix the headline for me?
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