The UK Government have been working closely with the major international organisations (World Bank, International Monetary Fund, UN agencies and International Food Policy Research Institute) in order to assess future price trends. Increased cereal production and the removal of export bans have brought about a recent calming of markets, and prices have fallen back from the very high levels seen earlier this year. But the consensus remains that the underlying demand for food remains strong, and according to the World Bank, this is likely to keep prices well above 2004 levels for most food crops until 2015.
The Government recently published a detailed analysis of the causes of recent price rises. High oil prices have put upward pressure on food prices by increasing production costs, through high fuel, fertiliser, transport, packaging, and processing costs. The World Bank estimates that a 10 per cent. rise in crude oil prices translates into a 1.6 per cent. increase in agricultural commodity prices. Weather has a direct impact on agricultural yields and food supplies. While recent food price rises cannot be linked directly with longer-term trends in climate change, there is no room for complacency. The UK Government will continue to push the international community for significantly higher investment in water management in developing countries, to ensure their agriculture is better prepared for the increasingly erratic weather patterns that are predicted.
The British Government remain concerned about the impact of high food prices on the poorest people in developing countries. We are pleased with the outcome at the recent G8 summit, where members committed $10 billion to improving global food security. We will continue to take a leading role in pressing for a coordinated and effective international response.