New Delhi: Global food prices are expected to be higher in the 2011-20 period compared with the previous decade and this could have a "devastating" impact on the poor in developing countries, an OECD-FAO report has said.

"Higher food prices and volatility in commodity markets are here to stay," Organisation for Economic Co-operation and Development (OECD) and Food and Agriculture Organisation (FAO) said in a joint report released on Friday.

The report 'OECD-FAO Agriculture Outlook for 2011-2020' noted that food prices are expected to fall from the current high level in the coming months on good harvest but the prices are expected to be higher in this decade than 2001-2010.

"A good harvest in the coming months should push commodity prices down from the extreme levels seen earlier this year. However, the outlook states that over the coming
decade real prices for cereals could average as much as 20 per cent higher and those for meats as much as 30 per cent higher, compared to 2001-10," the report said.

The projections are well below the peak price level experienced in 2007-08 and again this year, it added.

"While higher prices are generally good news for farmers, the impact on the poor in developing countries which spend a high proportion of their income on food can be devastating," said OECD Secretary General Angel Gurria in a statement.

The report pointed out that higher prices for commodities are being passed through the food chain, which leads to rising consumer price inflation in most countries.

"This raises concern for economic stability and food security in some developing countries, with poor consumers most at risk of malnutrition," it added. Despite increasing prices of commodities, inflation is expected to remain subdued in most parts of the world in the
current decade, the report noted.

OECD-FAO report asked the governments to encourage investment in agriculture in developing countries, remove production and trade distorting policies and assist the
vulnerable to better manage risk and uncertainty.

"In the current market context, price volatility could remain a feature of agriculture markets, and coherent policies are required to both reduce volatility and limit its negative
impacts," United Nations body FAO Director General Jacques Diouf said.

He suggested that the key solution to the problem will be boosting investment in agriculture and reinforcing rural development in developing countries, where 98 per cent of the hungry people live today and where population is expected to increase by 47 per cent over the current decade.

The action should focus in particular on smallhodlers in low-income food-deficit countries, he added.

In the next ten years, the OECD-FAO report projected inflation in OECD countries would average around 2 per cent per annum, while higher inflation rates, in the 4-8 per cent range, are anticipated for high growth emerging economies.

Apart from projection of higher prices in the current decade, the report also revealed that the global agricultural production is likely to grow more slowly over the current decade than in the last ten years.

"Farm output is expected to rise by 1.7 per cent annually, compared to the 2.6 per cent growth rate of the past decade. Despite this slower growth, production per capita is still projected to rise by 0.7 per cent annually," it said.

Per-capita food consumption will expand most rapidly in Eastern Europe, Asia and Latin America, where incomes are rising and populations growth is slowing.

Meat, dairy products, vegetable oils and sugar should experience the highest demand increases, according to the report.

Agencies