Price Volatility & Food Price

1. Recent climate events may significantly reduce agricultural production

next session.

2. The FAO Food Price Index at the end of 2010 returned to its highest level.

3. No doubt higher prices & volatility will continue in the next year if we fail to
tackle the structural causes of imbalance in the International agricultural
system.

4. Today there are still close to one billion people who are hungry.

5. In next 40 years, will require a 70% increase in agricultural production

worldwide and a 100% increase in the developing countries.

6. 1st is the issue of investment: The share of agriculture development

assistance(ODA) dropped from-

1980 2006 Present

19% 3% ~5%

7. Then there is the issue of International trade in agricultural commodities

which is neither free nor fair.

8. Finally, there is the subject of speculation that is exacerbated by the measures

of liberalization of agricultural futures markets in a context of economic &
financial crisis, which serve as a hedging instrument. There is a pressing need
for new measures of transparency & regulation to deal with this.

9. The solution to the problem of hunger & food insecurity in the world therefore
requires “an effective coordination of decisions on investment,
international agricultural trade & financial markets.”

10. In an uncertain climatic context marked by floods & droughts, we need to be

in a position to finance small water control works, local storage facilities & rural
roads, as well as fishing ports 7 slaughterhouses, etc. Only then will it be
possible to secure food production & enhance the productivity &
competitiveness of small farmers, thus lowering the consumer prices &
increasing the income of rural populations.

11. Developing countries, for their part, must increase their national budget
allocations to agriculture. And private foreign direct investment needs to be
made in conditions that will ensure in particular.
12. Without long-term structural decisions & the necessary political will and
financial resources for their implementation, food insecurity will persist with a
succession of crises affecting most seriously the poorest populations. This will
generate political instability in countries & threaten world peace & security.

--U.N. Information System, New

Delhi

Jacques Diouf,

Director-General of FAO