The world faces a protracted bout of extremely high food prices, the US government has warned, overwhelming farmers' ability to cool commodity markets by planting millions of additional hectares with crops.
The US Department of Agriculture on Thursday forecast nominal record farm-gate prices for corn, wheat and soyabeans in the crop year that begins with the 2011 harvests. It added that food inflation would surge in the second half of this year as wholesale prices filtered through the supply chain, affecting consumers.
The warning at the USDA Outlook Forum in Washington, the biggest annual gathering of the agribusiness sector, is likely to fuel global concerns about rising inflation and the potential for destabilising food riots in developing countries.
Joseph Glauber, USDA chief economist, told the conference that in spite of higher planting for corn and soyabeans this spring, grain and oilseed markets were "still forecast to be tight" in 2011-12 due to strong export and biofuel demand.
"While it is often said that the cure for high prices is high prices, even with additional supplies expected this year, it is likely that the tight stocks-to-use situation will not be entirely mitigated over the course of one or even two growing seasons," he said.
Mr Glauber forecast that the heavily subsidised US ethanol industry's demand for corn would continue to grow in spite of higher input costs, consuming about 36 per cent of the domestic crop.
