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FAO Convenes Meeting On Grain Prices Worries


A truck unloads grain at an elevator in the Russian village of Grachevka (file photo)
With memories fresh of the food crisis of two years ago, the United Nations' Food and Agriculture Organization (FAO) is holding an extraordinary meeting today prompted by renewed global worries about high food prices.

Delegates at FAO’s Rome headquarters will try to find a way to restore stability.

In a statement, the FAO said participants would "share information on recent market instability and examine the role of market information and transparency for crops such as grains and rice."

The FAO's monthly index of food prices has risen by one-quarter since early 2009. Increases are particularly felt in developing countries, where food makes up a large proportion of household spending.

Rising food prices have sparked riots in Mozambique and are prompting fears of a repeat of the massive price spike that caused unrest in several countries across the world two years ago.

But UN officials have been stressing the current situation is nowhere near the emergency crisis in 2007-08.

Laurine Simon, an analyst at the French-based monthly publication on cereals markets "Strategie Grains," tells RFE/RL that's because stocks are now up -- about one-fifth higher in the past year alone -- and projected global harvests are expected to be adequate.

"We have a decrease of global production compared to last year, which is mainly due to the situation in Russia and Ukraine," Simon says. "In the European Union, we have a generally stable wheat production compared to last year. In the United States, we have a slight increase. But the important factor is the increase of stocks."

Devastating Drought

The Rome meeting was expected to look at a Russian grain export ban that came into force last month and which has been blamed as one key factor in higher global prices.

Sergei Sukhov, deputy director of the Department on Regulation of Food and Agriculture Markets at the Russian Agriculture Ministry, and Sergei Levin, director-general of United Grain Company, the state agent for purchasing and commodity interventions on the grain market of Russia, were scheduled to attend the gathering.

The export ban was decided after this summer's record-high temperatures, compounded by a devastating drought and forest fires, destroyed one-quarter of the country's crops and cut harvest forecasts.

But the president of Russia's Grain Union, Arkadi Zlochevski, told Reuters that reserves will allow the country to meet demand at home.

"We have lost almost a third of what we expected initially. But anyway we will have 62 or 65 millions of tons in granaries," Zlochevski said. "And taking into consideration the reserves, and they are now the biggest in history -- the state statistics center says this is about 26 million tons -- this is enough to satisfy all national needs in this season. Exports are banned."

Russian President Dmitry Medvedev, whose country is one of the world's largest wheat exporters, has said Moscow could lift its ban later this year when the final harvest figures arrive.

Prices on buckwheat went up by more than 10 percent this month after worried Russians rushed to buy up their staple food.

The extreme weather has also affected the harvest in other major grain producers in the region, including Ukraine and Kazakhstan.

Earlier this week, Kazakhstan’s Agriculture Ministry announced that the country’s grain harvest this year will be 40 percent lower than last year. The Ukrainian government expects the country’s grain harvest to be 15 percent lower.

In late August, Auezkhan Darinov, the president of the Union of Farmers of Kazakhstan, told RFE/RL’s Kazakh Service that the drought may result in the bankruptcy of up to 20 percent of Kazakh farmers who will be unable to pay their debts because heat destroyed their crops.

Export bans in some 40 countries during the food price crisis two years ago caused a dramatic drop in cereal stocks. UN officials have been pressing for coordinated strategies to avoid a repeat of that scenario, which was blamed for a rise in the number of hungry people worldwide.

That reached a record in 2009 -- more than 1 billion -- though it has since eased to an estimated 925 million this year.

The agency is to make public its quarterly outlook on cereal supply and demand during their closed-door meeting today.