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Food Prices to Stay High on Underinvestment, Climate, IFAD Says

July 25 (Bloomberg) -- Global food prices will remain high as underinvestment in agriculture over decades has left supplies unable to meet demand, according to a United Nations agency.

“We are just depleting our stocks and now we have this high population growth,” Kanayo F Nwanze, president of the International Fund for Agricultural Development, said in an interview. “Prices won’t come down overnight. They are going to stay high for some time to come.”

Global food costs tracked by the United Nations increased in June for the 10th time in the past 12 months, staying near a record on higher rice, sugar and dairy prices, while meat reached an all-time high. Aid to agriculture dropped to 4.3 percent of total assistance in 2008 from 18 percent in 1979, according to IFAD data.

“Food price crisis, food price hikes or food price volatility is not just a simple consequence of shortage of food because of weather conditions and climate change,” Nwanze said in an interview on July 22 in Seoul. “A primary cause is we’ve disinvested in agriculture over decades.”

Nwanze has urged the global community for more investments in rural development to help meet growing food demand led by emerging economies including China, India and Brazil. The 165-member nation agency works to combat rural poverty and hunger by providing low-interest loans and grants to developing countries.

Rice, the staple food for about half of the global population, has surged 65 percent in the past year on the Chicago Board of Trade. Corn, used in food and livestock-feed, has jumped 78 percent.

World Population

The United Nations has said that by 2050, food production must increase by 70 percent to feed an estimated world population of 9 billion people, up from almost 7 billion this year.

“The middle class is growing, their demand for better food is growing and they want more meat, which takes more grains,” Nwanze said. “Who is going to feed us in 2020?”

World grain stocks will probably slide for a second year in the 12 months through June 2012, dropping to a four-year low, as corn consumption outpaces production and dry weather hurts wheat prospects, the International Grains Council forecast in April.

“Climate change will compound the whole issue of food security,” Nwanze said. “The world is yet to understand implications of the impact of climate change,” he said. “We are not investing enough money.”

To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net.

To contact the editors responsible for this story: Richard Dobson at rdobson4@bloomberg.net

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