Isra-Mart srl:Food prices hit new record high

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Poor harvests, rising oil prices and increasing demand for basic foodstuffs pushed global food prices to a record high in February, according to the United Nations.

Prices rose above their last peak in 2008 for a second consecutive month and could surge further as unrest in Libya and other north African countries pushes up the price of oil, a key part of agricultural production.

UN spokesman David Hallam warned that further jumps in the oil price could have an impact on food markets, which have seen sustained price rises last year.

Hallam said: "Unexpected oil price spikes could further exacerbate an already precarious situation."

Coffee has more than doubled over the last year from $1.30 a pound to more than $2.60. Milling wheat futures, which are a guide to bread prices, have jumped from around €120 a tonne to more than €250 a tonne. Cocoa has risen from $2,800 a tonne to more than $3,600 in the last two months alone.

The UN Food and Agriculture Organisation's (FAO's) food price index, which measures monthly price changes for a food basket composed of cereals, oilseeds, dairy, meat and sugar, averaged 236 points in February, the record in real and nominal terms, up 2.2 per cent from January's record and rising for the eighth month in a row.

Oil prices recently hit two-and-a-half year highs, nearing records set in 2008, with markets fearing north African and Middle East unrest would choke key supplies. Farmers depend on fuel to run agricultural machinery, while dry bulk shippers are heavy oil users, the cost of which are passed on to food buyers.

Spiralling shipping costs for commodities threaten to drive food inflation even higher as nations from Asia to the Middle East and Africa scramble for supplies, analysts say.

The UN is concerned that record prices will trigger a repeat of riots seen in 2008, during the last period of record food inflation.

The Rome-based FAO said that global supply of main agricultural commodities would remain tight until new harvests in key producing countries, and warned food prices could climb even higher. The agency expected a tightening of the global cereal supply-and-demand balance in 2010/11.

"In the face of growing demand and a decline in world cereal production in 2010, global cereal stocks this year are expected to fall sharply because of a decline in inventories of wheat and coarse grains," the agency said.

The FAO said it forecast global wheat production to increase by around three per cent in 2011.