FAO's food price index for December 2010 exceeds 2007-2008 levels

"Food prices hit a record high" in December, exceeding 2007-2008 levels when price spikes resulted in riots around the world, the U.N. Food and Agriculture Organization (FAO) said Wednesday in its monthly Food Price Index, the Financial Times reports (Blas, 1/5).

"An index of 55 food commodities tracked by the [FAO] gained for a sixth month to 214.7 points, above the previous all-time high of 213.5 in June 2008, the Rome-based U.N. agency said ... The gauges for sugar and meat prices advanced to records," Bloomberg Businessweek writes (Ruitenberg, 1/5). The index increased almost 4.2 percent from November and is at its highest since the index was first calculated in 1990, according to the Financial Times (1/5).

"There is still, unfortunately, the potential for grain prices to strengthen on the back of a lot of uncertainty," Abdolreza Abbassian, FAO senior economist, said by phone from Rome, Bloomberg Businessweek reports. "If anything goes wrong with the South American crop, there is plenty of room for them to increase," Abbassian said. "In 2008 we had rapid increases in petroleum prices, fertilizer prices and other inputs," he noted. "So far, those increases have been rather constrained. It doesn't really reduce the fear about what could be in store in the coming weeks or months," according to Abbassian (1/5).

"The FAO is drawing comfort from relatively stable prices for rice, one of the two most important cereals for global food security, which remains far below its record high," the Financial Times notes. "However, the cost of the other critical staple, wheat, is now rising fast on the back of poor harvests. 'This is a high prices situation,'" Abbassian said. "Rice and wheat are, from a global food security perspective, the critical agricultural commodities, not sugar, oilseeds or meat," he added (1/5).