Threat of food crisis seen fading as grain stocks climb

(Giuseppe Carotenuto photo courtesy FAO)

London | Reuters — A sudden change in the weather no longer raises the spectre of a food price crisis, with grain stocks rebuilt and governments now paying much closer attention to agriculture, a senior United Nations economist said in an interview Monday.

“The buffer is big and unexpected shortfalls can be met by (grain) reserves,” said Abdolreza Abbassian, senior economist with the United Nations’ Food and Agriculture Organization (FAO).

Drought in major grain-producing countries in both 2007-08 and 2010-11 led to a sharp rise in prices, plunging millions more people into poverty, sparking riots and playing a role in the overthrow of some governments.

“We’ve gone from a tight situation to super ample conditions… it looks like you have a good buffer even for (supply) shocks here and there. We could have El Nino this year, for example,” said Abbassian, who is in London for the International Grains Council’s annual conference.

An El Nino weather pattern poses a threat to yields of maize, wheat and rice.

“A strengthening El Nino a few years ago the whole world would have been talking about it but this is not the same situation,” he said.

The FAO forecast last week that stocks-to-use ratio, a key measure for how long reserves could last, would stand at 25.6 per cent for the 2014-15 season, well above a very tight 18.5 per cent registered in 2007-08.

Abbassian said grain prices this year may be more heavily influenced by outside factors, such as trends in the U.S. dollar or Middle East politics, than the traditional drivers of supply and demand.

Governments are also much better prepared than they were in the past, he said.

“I think we’ve learnt a lot from what happened. I think there is a lot of learning going on because of so many years of neglect,” he said.

“They (governments) have all been changed (by the crises). I think it is on the radars,” he said, adding that countries were more conscious of the need to have more of their own reserves.

Abbassian said governments had begun to pay more attention to issues other than prices, with increased focus on problems such as food waste.

“A lot of new areas have come up and that attracted the new generation to go and work on them.” He said agricultural economics was no longer an unfashionable area of study.

Nigel Hunt is a senior Reuters correspondent based in London.

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