Falling food prices may be good news for millions of urban poor but not for small-scale farmers who will struggle to feed their families without help and incentives, such as an end to export subsidies, said the Food and Agriculture Organization on Monday.
Prices for the main food crops, livestock and fish products all fell in 2015, signalling the likely end to an era of high prices, according to FAO, a U.N. agency.
The lower food prices, which are expected to continue for several years, mean poor families who are not farmers can afford more nutritious meals, FAO director-general Jose Graziano da Silva told agriculture and trade ministers at FAO’s headquarters in Rome on Monday.
“You are confronted by the challenge of keeping nutritious food affordable for the poor, while ensuring good incentives for producers, including family farmers,” Graziano da Silva said at the high-level meeting on agricultural commodity prices.
“Low food prices reduce the incomes of farmers, especially poor family farmers who produce staple food in developing countries,” he said.
“This cut in the flow of cash into rural communities also reduces the incentives for new investments in production, infrastructure and services,” he added.
One way to help small farmers cope with falling commodity prices is to end agricultural export subsidies that affect prices in global markets, Graziano da Silva said.
Last December, countries in the 164-member World Trade Organization (WTO) agreed to end these subsidies – developed countries immediately and developing countries by the end of 2018.
The decision will “help level the playing field in agriculture markets, to the benefit of farmers and exporters in developing and least-developed countries,” WTO director-general Roberto Azevedo told the meeting in Rome.
Social protection programmes and schemes like food vouchers, are also essential ways to boost farmers’ incomes while making food affordable for other poor families, Graziano da Silva said.
A series of price surges between 2008 and 2012 and volatility in food markets sparked food riots or unrest in parts of Africa, South America, South Asia and the Middle East.
Prices have since become less volatile and are now steadily declining, following strong harvests, global economic slowdown and falling oil prices, but they remain higher than in the 1990s, according to a joint OECD/FAO report.
In the next decade, the growth in demand for food is likely to slow, as population growth falls and incomes rise slowly, the Agricultural Outlook report said.
People in both developed and developing countries are expected to eat more processed food, so the demand for sugar, oils and fat is likely to rise faster than staples and protein.
However, climate change is likely to cause some abrupt price surges over the next decade, it said.