World food prices climbed in June on increased sugar and dairy costs, adding to inflationary pressure that has prompted central banks across the world to raise interest rates. An index of 55 food commodities rose to 234 points from 231 points in May, the United Nations’ Food and Agriculture Organization said in a report on its website today. The gauge climbed to an all-time high of 238 in February. Food will remain costly in the next few years and price swings will be around “for a long time,” Jose Graziano da Silva, the FAO’s director-general elect, said June 27. The price of staple foods including corn will more than double in two decades without action, Oxfam International said in May. “The question of how to satisfy the food needs of an expanding population with ever more sophisticated tastes and an increasingly unified mode of consumption is getting even more pressing,” analysts Veronique Riches-Flores and Loic de Galzain at Societe Generale SA wrote in a report yesterday. World food output will have to rise 70 percent by 2050 as the global population climbs to 9.2 billion from an estimated 6.9 billion in 2010, the FAO estimates. Agriculture Output Growth in agricultural output will slow to 1.7 percent a year through 2020, compared with 2.6 percent in the previous decade, FAO and the Paris-based Organization for Economic Cooperation and Development said in a report last month. The FAO sugar index jumped 15 percent to 358 points, as production in Brazil, the world’s largest producer of the sweetener, is forecast to fall below last year’s level, the FAO said. The dairy index rose to 232 points from 231 points. “Dangerous levels” of food prices had pushed about 44 million people into poverty since June, World Bank President Robert Zoellick said in February. Another 10 million may join them should the UN food index rise another 10 percent, the World Bank said April 16. The number of hungry people in the world declined last year to 925 million from more than 1 billion in 2009, according to the FAO. The European Central Bank raised interest rates on April 7, joining nations from China to Sweden that increased borrowing costs this year in a bid to control inflation partly blamed on food costs. Egypt, where rising food prices helped spark protests that led to February’s ouster of President Hosni Mubarak, last month forecast “elevated” inflation. Food Imports Nations will spend $1.29 trillion to import food this year, the most ever and 21 percent more than in 2010, the FAO estimates. Raw sugar futures jumped 14 percent in New York last month. U.S. spot prices for milk rose 16 percent in June, according to the U.S. Department of Agriculture. Corn prices fell 17 percent in Chicago in June, the biggest monthly decline since October 2008, while wheat slumped 21 percent, the biggest such drop since February 1986. Soybean futures fell 6 percent. The FAO, set up in 1945 as a specialized UN agency, says it leads international efforts to defeat hunger and helps developing countries improve farming. Its mandate includes lifting nutrition levels and agricultural productivity. To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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