Much to the discomfort of consumers, food articles will be costlier by up to 27 per cent by 2020 if the global slowdown continues and investment in agriculture falls, says a US think-tank.
"The prices of major cereals will increase significantly if economic growth is reduced by two to three per cent and agricultural investment and productivity also decline, in line with the reduced economic growth," the International Food Policy Research Institute said in its report 'Food and Financial Crisis: Implications for Agriculture and the Poor' released today in Mozambique.
By 2020, rice prices would rise by 13 per cent, wheat by 15 per cent, and maize by 27 per cent, it said, adding that in the past few months, the prices of major cereals have fallen by about 30 to 40 per cent as a result of the economic slowdown and favourable weather conditions, but they remain high compared to the rates three years ago.
Many developing regions have experienced high economic growth in recent years. Between 2005-2007, developing countries in Asia grew at an annual average rate of nine per cent, while African economies grew at six per cent.
In 2008, however, with the onset of the food and financial crises, that robust growth has tapered off, the report said.
"When economic growth declines, investment in agriculture is typically cut back and that hurts production in the long-run," said Mark Rosegrant, director of Environment and Production Technology at IFPRI.
However, if developing countries and investors can maintain agricultural productivity and investments under a recession, these dire consequences can be avoided, he said, adding, 'we need more public spending in research and development, irrigation, and productive services in developing countries."
In an alternative scenario, the report also noted that if economic growth is reduced, but investment in agriculture and productivity are maintained, 'grain would be much more affordable, per capita calorie consumption would be much higher, and there would be significantly fewer malnourished children'.
"The current crises (food and financial crisis) are likely to have strong and long-lasting effects on emerging economies...more effort is needed to successfully resolve the food price crisis, build resistance to future challenges, and reduce poverty and hunger," IFPRI director general Joachim von Braun said.
Because the two crises are interconnected, a coordinated response is needed to alleviate the double blow on the poor, he said, adding that IFPRI recommends three priorities for action: promote pro-poor agricultural growth, reduce market volatility, and expand social safety nets and child nutrition programmes.