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High Food Prices May Hit Growth In C. Asia, Europe

High food prices could hit agricultural growth in Central Asia and Europe - UN

26 June 2008 - Soaring food prices could reverse the significant growth in agricultural production seen in some of the poorest countries in Europe and Central Asia over the past 10 years, the Director-General of the United Nations Food and Agriculture Organization (FAO) said today.

"In the past ten years, some of the poorest countries have posted the largest gains in per capita national income, notably the countries of the Transcaucasus and Central Asia, while growth has been slower in the countries of Western and Eastern Europe," Jacques Diouf said, noting that per capita agricultural production had also grown fastest in those countries.

Addressing the opening of the FAO Regional Conference for Europe in Innsbruck, Mr. Diouf added that this positive ten-year trend might be coming to a halt without bold policy steps to contain price increases.

The Director-General also stressed that governments in the region had not always responded to higher prices by supporting agricultural productivity, instead turning to export restrictions which have led to cancelled export contracts and lower incomes for farmers.

"As in most parts of the world affected by food insecurity, hunger in Europe and Central Asia derives from rural poverty and from natural and man-made disasters, rather than from a total lack of food at macroeconomic level," he said.

Mr. Diouf said that there was strong potential for an increase in agricultural production in some parts of the region and cited Kazakhstan, Russia and Ukraine: "With a supportive policy environment and investment in infrastructure, at least 13 million hectares could be returned to production, without major cost to the environment."

He noted that crop yields in those three countries are three times lower than in Central, Eastern and Western Europe, where modern inputs are employed and contract farming is used to reduce market risks.

"What is lacking for agricultural and rural growth are development policies that favour commercial agriculture and institutions of governance and support for the development of family farms and the private sector," he said.

ENDS

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