France, which has just assumed the presidency of the G20, has placed the issue of soaring global food prices on the agenda of the G20 meeting to be held in Paris later this month amid fears that if not tackled the resultant inflation will stall the EU’s economic recovery.
Malta has started to feel the effects of the latest increases in the international prices of many food commodities, with the price of local milk raised last week and bakers mulling an increase in that of the Maltese loaf. The prices of many raw materials used in processed food, such as wheat, barley, sugar, dairy products and animal feed, have reached a record high.
The island imports almost all of its food and animal feed and international prices have a direct bearing on the end product sold in the supermarkets. High transport expenses also contribute to the cost of Maltese imports.
According to the latest Food Price Index, issued every month by the United Nationals Food and Agriculture Organisation (FAO), global prices reached a peak in December.
The index, which tracks the wholesale cost of several agricultural commodities, including wheat, corn, rice, oilseeds, dairy products, sugar and meats, rose by 32 per cent over July – the highest since 2008 when the world had faced a similar global price crisis.
The situation on the international markets is not expected to improve in the coming months as according to many forecasters, droughts, the current spell of cold weather and floods hitting harvests across the world are expected to push food prices up further.
Welcoming France’s decision, EU Agriculture Commissioner Dacian Ciolos yesterday announced he would attend the meeting due to the growing importance of the issue.
He said the food price increases show the importance of a strong European Common Agricultural Policy (CAP) and said that one of the principal objectives of discussions on the post-2013 CAP should be viable food production.
“The provision of safe and sufficient food supplies, in the context of growing global demand, economic crisis and much greater market volatility, is fundamental and will be one of the main elements the Commission will consider when making its proposals for the future CAP in the middle of this year,” he said.
According to the European Commission, there is no single cause and no simple explanation for the increase in food prices and the factors include rising global demand, bad harvests in exporting countries, export bans and speculation.
An EU official yesterday told The Times that high food prices are expected to dominate the EU’s agriculture agenda for the next years as it was evident that with growing demand and climate change the price of food would be very volatile.
According to a recent study published jointly by the Organisation for Economic Co-operation and Development (OECD) and the United Nations, the average wheat and coarse grain prices will be between 15-40 per cent higher in real terms (adjusted for inflation) over the next 10 years compared to their average levels during the 1997-2006 period.
Real prices for vegetable oils are projected to be more than 40 per cent higher and dairy prices are expected to soar by an average of 16-45 per cent.