Wheat and corn prices may be 25 per cent higher in a decade's time than was predicted last year as demand for food and biofuels soars, the Organisation for Economic Co-operation and Development (OECD) said, GN reported.
Wheat is likely to cost $231.60 a tonne in 2016-2017 and coarse grains, notably corn, may be at $166.60 a tonne, the OECD said in a report produced with the Food and Agriculture Organisation (FAO) of the United Nations. The organisations predicted prices of $183.20 and $138.20 in their report a year ago.
"Changing diets, urbanisation, economic growth and expanding populations are driving food and feed demand in developing countries," the organisations said in the report, released yesterday. "While smaller than the increase in food and feed use, biofuel demand is the largest source of new demand in decades." Wheat, corn, rice and soybeans have climbed to records this year on shrinking global stockpiles and rising demand.
The World Bank says 33 nations from Mexico to Yemen may face social unrest after food and energy costs increased for six straight years. The spike in prices has already prompted deadly food riots in Egypt, Haiti and Cameroon this year.
At the same time, record crude-oil prices are bolstering demand for alternative fuels, such as ethanol derived from corn or sugar cane. Total use of grains to make ethanol will jump 40 per cent to about 98 million tons, 94 per cent of it from corn, the FAO said on May 22.
"We have demand for grains that is growing faster and faster," said Nicolas Fragneau, who is setting up an agriculture investment fund at Credit Agricole Asset Management in Paris. "The market will work and production will increase, but we have to create an entire agriculture investment industry and that takes time."
Forecasts for rice prices, which have risen to record levels recently, were increased only slightly through 2010, and were little changed in the years beyond.
The report predicted a 10 per cent increase in global production fuelled by larger crops in India and southeast Asia.