Emmie blog

FAO warns against food export curbs

MILAN (Reuters) – The United Nations' food agency warned food producing countries on Wednesday against introducing export curbs to protect local markets as world food prices rose close to levels that triggered food riots in 2007/2008.

Global food prices rose above 2008 highs in December with the Food Price Index of the U.N. Food and Agriculture Organization (FAO) at record highs.

Wheat and other grains rallied in January on concerns about tight supplies, with Euronext milling wheat futures hitting new contract highs on Wednesday.

"FAO strongly advises against such measures, as they often provoke more uncertainty and disruption on world markets and drive prices up further globally, while depressing prices domestically and hence curtailing incentives to produce more food," Richard China, director of the FAO Policy and Programme Development Support Division, said in a statement.

Grain prices surged in 2010 as wheat was driven higher by a series of weather events including drought in Russia, which introduced an export ban. In 2008, several countries curbed exports.

New price shocks have raised serious concerns about implications for food markets in vulnerable countries, the FAO said in the statement, as it published updated guidelines on how to deal with high food prices in developing countries.

This month has seen civil unrest in several countries including Algeria, Jordan and Sudan, due at least in part to high food prices.

The agency has called upon countries not to take any policy actions that might appear useful in the short term but could undermine existing markets and have harmful longer-term effects or even aggravate the situation.

"In cases where markets are malfunctioning or absent, it may be necessary to take extreme measures that shortcut market mechanisms. In this situation, interventions could also be used to help private sector operators emerge," the agency said.

In the medium and longer term, only investment in developing countries' agriculture would ensure sustainable productivity growth, healthy markets, increased resilience to international price spikes and improved food security, FAO's China said.

(Reporting by Svetlana Kovalyova; Editing by Anthony Barker)