Wheat pushes world food prices up

Wheat being held by a farmer The UN says there are different reasons for current high food price levels and the high prices of 2008

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The UN Food and Agricultural Organization (FAO) says that world food prices have risen to their highest level in two years.

It says the increase is due partly to a drought in Russia, which has lead to government export restrictions and a shortage of supply of wheat.

Meat prices have been particularly hit and are at their highest in 20 years.

The Rome-based agency says that its overall food price index rose by 5% alone between July and August.

However, this is 38% down from its peak in June 2008.

The UN agency says there are sharp differences between the current situation and the spring of 2008, when the price of oil and demand for biofuels pushed world food stocks to their lowest levels since 1982.

But meat prices are pushed by two forces - rising price of wheat and other grains which make producing it more costly - and also increasing demand for the meat itself from emerging markets like China.

It also reduced its forecast for global production of food staples in 2010.

The FAO now thinks that world cereal production will be 1.8% lower than its June forecast.

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The wheat production forecast has been revised for the second time in a month. It is expected to be 5% lower than in 2009.

But despite these falls, world cereal and wheat production levels would still be the third highest on record, the UN agency said.

Rice production is also expected to be lower. Much of the revision was due to floods in Pakistan and lower expectations in China, Egypt, India, Laos and the Philippines.

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